Habemus Taoiseach. With white smoke billowing from the chimney of Leinster House, there is much reason for cheer in the corridors of power. Tax take, car registrations, and GDP growth are all up, while unemployment – and particularly youth unemployment – is down.
With deals to be done, Independent TDs to be cosseted, and a public sector increasingly aware of the growing size of the pie to be divvied up, the incoming administration will be glad of the wriggle room with tax collection close to €500 million ahead of target, according to the latest exchequer figures.
Corporation tax continues to be the catalyst for such good numbers, running well ahead of expectations. The €759 million out-turn in four months was €315 million or 70.8 per cent more than projected.
The latest EU Commission forecasts were also broadly upbeat for Ireland. The economy is predicted to be the fastest-growing economy in Europe this year by the commission. The economy is expected to grow by 4.9 per cent in 2016, which is higher than the 4.5 per cent estimated three months ago.
The projected level of growth is well ahead of the Republic’s EU neighbours, with the euro zone average of 1.6 per cent expected growth this year, down slightly from the 1.7 per cent forecast in February.
The commission also revised upwards its estimates for Irish growth in 2017 to 3.7 per cent, up slightly from the growth rate of 3.5 per cent predicted in February.
A VAT shortfall in April may have raised questions over the strength of consumer spending, but those fears will have been calmed somewhat by new car registrations, which were up 10 per cent on last year. There were sales of 10,408 for the month, bringing the total so far this year to 93,240 – an increase of 26 per cent on the first four months of 2015.
The good news kept on coming as the unemployment rate fell to 8.4 per cent last month, down from 8.6 per cent in March and from 9.7 per cent for April 2015, according to the latest Central Statistics Office (CSO) figures.
But, before Enda Kenny gets too comfortable settling back into Merrion St, there are still problems with the banks. Irish savers are earning the lowest return on their deposits across 18 European countries, new figures from the European Central Bank show.
The average rate on new fixed-rate household deposits in March 2016 was just 0.18 per cent – the lowest of 18 European countries surveyed. This was well below the 1.69 per cent Dutch savers are enjoying on their fixed-rate deposits, or the 1.4 per cent on offer in France and 1.14 per cent in Italy.
So with it being hard enough to save, it doesn’t make the challenge of getting a mortgage any easier. Figures from the Banking and Payments Federation this week showed the €1 billion mortgage lending in the first quarter of this year was more than 2.5 per cent greater than the same period last year. While that’s encouraging, the amount extended to house purchasers fell by 8 per cent.
It almost seems like the aviation equivalent of a Fine Gael-Fianna Fail coalition – but rivals Aer Lingus and Ryanair are said to be close to some kind of passenger-sharing deal. International Airlines Group (IAG) chief executive Willie Walsh said this week the two airlines had been in talks since last year about the possibility of Ryanair feeding passengers from its European network to Aer Lingus's long-haul flights.
Such an agreement would allow customers to fly one leg of their journey with Ryanair and the long-haul element with Aer Lingus on the one ticket. Walsh said on Thursday an agreement was “inevitable”, while Ryanair chief executive Michael O’Leary indicated last year the airline was open to such an arrangement.
Anyone on one of those Aer Lingus long-haul flights will soon be able to while away the hours with whatever latest box set tickles their fancy, as the airline is to offer wifi to passengers under a new deal struck between IAG and US tech firm Gogo. Four Aer Lingus Boeing 757s will be fitted with satellite technology giving passengers full broadband access.
The system will allow travellers to use multiple devices and provide high-quality streaming for services such as Netflix and Amazon.
By 2019, 80 per cent of IAG’s long-haul fleet will be fitted with the system, known as 2Ku.
Over at Ryanair, O’Leary has said the airline is on course to overtake Easyjet as the biggest UK carrier by the end of the year. In tandem with plans to position itself as the second- largest carrier in Germany within a similar timeframe, he presented the growth as further momentum in the airline’s European dominance.
The “gamechanger” for O’Leary is a fleet of 200 newly designed Boeing 737s that will come into circulation between 2019 and 2023.
They will “transform” the cost base by offering 4 per cent more passenger capacity (eight seats per flight), and Independent TD Danny Healy-Rae is sure to be heartened that the move could also cut “per passenger” fuel consumption by up to 19 per cent.
If the airline can do that, O’Leary said, it will get “closer and closer” to bringing average fares down from €45 to €25.”
They say the house always wins, but not so at Paddy Power Betfair this week as shares dropped on Wednesday after news that punters made a net £20 million profit against the bookmaker during the Cheltenham horseracing festival in March, dragging on its first- quarter revenues. Nevertheless, revenues rose 16 per cent to £339 million in the first quarter from £293 million a year earlier. However, the result fell short of the £352 million that analysts in Davy had forecast and the £341 million that Goodbody Stockbrokers had pencilled in.
There was a minor furore at the Smurfit Kappa Group last week, which experienced some shareholder concern over executive pay. However, an influential advisory firm to major investors has said: "There does not appear to be a material disconnect between pay and performance" at the company.
The Institutional Shareholder Services didn’t write them a blank cheque though. It said it was concerned about the lack of retrospective disclosure in the annual report on the company’s bonus awards, and noted that severance payments for long-standing executives who leave the group, including a bonus equivalent to the highest such award over the previous three years, are more generous than what investors expect.
Tony Smurfit, who succeeded Gary McGann as chief executive last September, was awarded a €3.3 million pay package last year, including basic salary of €963,000, a cash bonus of €303,000 and pension and other benefits worth €265,000.
Another industry that has been in the throes of pay controversies in recent times is farming, and, in particular, milk. Better news this week as Lakeland Dairies, which acquired neighbouring co-op Fane Valley's dairy business, saw pretax profits rise 10 per cent last year to €12.8 million, despite the downturn in global markets.
The country’s third-largest co-op reported 2015 revenues of €588.5 million, down 6 per cent versus the €625 million recorded a year earlier, due to what it said was continuing pressure on returns.
