The fall-out from those astronomical GDP figures continued this week, and there are bound to have been some wry smiles in international circles as the Republic was slapped with a bill for an extra €280 million towards next year's EU's budget.
All those tax inversion deals have come home to roost, and there will be no tears shed for Minister for Finance Michael Noonan who said that the "distorted figures" would not have a direct bearing on employment and wealth creation for Irish citizens.
EU member states’ contributions to the bloc’s budget are mostly determined by gross national income – a measure similar to the more common GNP and GDP. So, yes, the State will have to cough up the extra money, but the sugary coat on the pill comes in the form of the extra billions that are generated by the State’s corporate tax practices.
Corporation tax, which surged to record levels last year, remains the largest contributor to the exchequer, coming in 19 per cent or €505 million ahead of target at €2.67 billion for the six-month period to the end of June.
Noonan did come out to say the State can afford to pay the extra money, and that multinationals are “less aggressive” in their tax planning now, following the abolition of the double Irish tax arrangement.
Indeed, several economists, including KBC's Austin Hughes and PwC's head of tax Joe Tynan, said during the week that while the figures may not have a direct bearing on wealth creation, they do boost the State's coffers via corporation tax.
Maybe it’s no surprise then that chartered accountants are continuing to reap financial rewards from the recovery with average salaries rising 9 per cent last year to €109,756, according to a new study. This comes on top of a 13 per cent rise a year earlier.
Retailers, however, continue to experience difficult trading conditions. Figures for the second quarter of the year show industry growth rates remained flat. The latest Grant Thornton/Retail Excellence Ireland (REI) retail productivity review show some sectors got a boost in late May and early June as warm weather hit the country, but, for most, it was a period of like-for-like sales decline.
The National Competitive Council was cautious about the lay of the land. It said that while the recovery appears to have consolidated, the outlook is "precarious" and plans to achieve a lasting recovery and full employment are "under serious and imminent threat" if we don't improve competitiveness.
“All of the countries with whom we trade, and compete for foreign direct investment with, are also striving to improve their business environments,” it said in a timely reminder to anybody getting carried away. “We need a relentless focus on reform and on continuing to improve Ireland’s competitiveness performance in areas that can be influenced by domestic policy action.”
There was plenty of cause for cheer among house-hunters this week as the Government unveiled its plan to solve the housing crisis. As well as increasing the number of homes built per year to 25,000 by 2021, a new scheme to provide first-time buyers with assistance will be tied in with incentives for developers to build.
The Central Bank, oft maligned for its controversial mortgage deposit rules, will have won back a few friends with the announcement that new rules are being planned which will compel banks to inform customers each year about alternative loan products that they could switch to and save money. Lenders will also be required to publish more information around their policies for setting variable mortgage rates.
Separately, it seems the rumours are true. Homeowners living close to a Luas or Dart station get a 6 per cent property price boost, according to new research undertaken by the property website Daft.ie. The study, which reviews almost one million listings over a 10-year period, also shows a 2 per cent rental premium for landlords with properties close to stations.
With the dust starting to settle on the British decision to leave the EU, both Taoiseach Enda Kenny and French president François Hollande met in Dublin this week, and agreed that Article 50 – the formal British request to leave – should be triggered as soon as possible.
European Central Bank president Mario Draghi said it was too early to assess the impact of the vote on the euro zone's economic recovery, and opted to keep its interest rates and stimulus unchanged.
“Following the UK referendum on EU membership, our assessment is that euro area financial markets have weathered the spike in uncertainty and volatility with encouraging resilience,” he said.
Earlier in the week, Draghi pleaded for governments to – get this – spend more. In an attempt to boost the euro zone’s economy as Brexit and weaker global growth threaten the bloc’s recovery, he railed against states that are tightening the purse strings.
Governments in China, Japan and Britain have already started easing their fiscal stance or hinted at plans to do so as sub-par global growth and inflation show that central banks’ ultra-easy monetary policy has hit its limit.
New figures by the EU Commission and the IMF show growth in the UK will fall sharply next year due to the impact of Brexit. The Commission sees a risk of recession if it has a serious impact on consumer and business confidence, and both organisations believe the best the UK can hope for next year is growth of 1 per cent.
The UK’s markets regulator insisted it would continue to apply all EU rules until there is clarity on future relations with the bloc.
The value of initial public offerings (IPOs) in Europe have stalled in the second quarter amid the uncertainty. According to PricewaterhouseCoopers (PwC), the value of IPOs shrank by 26 per cent to just under €11 billion in the run-up to the vote.
The decline was even more precipitous in London, which represents about 11 per cent of European activity, where it fell 75 per cent to €1.2 billion – a seven-year low.
It has been well flagged that the effect of Britain’s exit is likely to be felt the most in Northern Ireland, but PwC’s latest UK Economic Outlook said it might manage to avoid slipping into recession.
Economic growth in the North is likely to fall to 0.2 per cent next year, it said. Dr Esmond Birnie, PwC chief economist in Northern Ireland, also warned that quarter- on-quarter GDP growth could fall to close to zero in late 2016 and early 2017.
“In our main scenario, overall UK economic activity is projected to recover gradually later in 2017 as the immediate post-referendum shock starts to fade,” he said.
In media, State broadcaster RTÉ reported a deficit of €2.8 million for 2015 as costs rose by more than its revenues. Its annual report highlighted a €2.6 million negative impact from foreign currency movements on its sterling and dollar-based costs, which include programming acquired from overseas.
Total revenue rose €6.1 million or 1.9 per cent to €334.3 million. However, operating costs swelled €8.4 million to €320.3 million as it took on more staff.
In jobs news, The Irish Times reported that Pfizer's plans would lead to the creation up to 350 new jobs with its latest multimillion euro expansion of its Grange Castle Campus in Dublin. The US company is looking to build a five-storey biopharma manufacturing unit in two phases.
Elsewhere, Sigmar, one of the country’s largest recruitment firms, is to more than double its workforce with the creation of 150 new jobs by the end of 2018.
