Abbey chief: Brexit ‘act of self harm’ will hit Ire­land hard as well as UK

Irish Independent - Business Week - - FRONT PAGE - John Mul­li­gan

BREXIT is a “na­tional act of self-harm” that will be po­ten­tially very dam­ag­ing to Ire­land, ac­cord­ing to Charles Gal­lagher, the ex­ec­u­tive chair­man of stock mar­ket-listed home­builder Abbey.

“I’ll be very hon­est with you, I’m dis­tressed about Brexit,” said Mr Gal­lagher. “I spoke on pub­lic plat­forms in favour of the UK re­main­ing in the Euro­pean Union.”

Mr Gal­lagher, who lives in a well-to-do Lon­don com­muter town, un­suc­cess­fully stood as a Con­ser­va­tive can­di­date in a Labour strong­hold in York­shire in a 1987 gen­eral elec­tion. He said he voted Con­ser­va­tive in the last elec­tion and will again in the next, but re­mains a staunch re­mainer.

“I still at this very last mo­ment, I light can­dles and I pray that there might be a change of heart on this sub­ject,” he said.

“I see very lit­tle good com­ing out of it. In the­ory, you can write lots of scripts about how things could be good or bad, but I per­son­ally feel it’s a na­tional act of self-harm.

“I don’t think it’s just go­ing to be dam­ag­ing to the UK. I think it’s go­ing to be dam­ag­ing to all of Europe and, po­ten­tially, par­tic­u­larly dam­ag­ing to Ire­land.”

Abbey, the small­est of three home­builders listed on the Ir­ish stock ex­change, sold 75 homes in Ire­land last year and 524 in the UK. It has a land bank in Ire­land that could po­ten­tially de­liver up to 700 units.

Mr Gal­lagher and his wider fam­ily own just over 80pc of Abbey, with an­other 10pc owned by in­sti­tu­tional in­vestor FMR. The com­pany has a mar­ket cap­i­tal­i­sa­tion of about €315m.

Abbey is ac­tively hunt­ing for sites in Ire­land in or­der to re­bal­ance its op­er­a­tions. His­tor­i­cally, Ire­land typ­i­cally ac­counted for about 40pc of its home sales.

“I don’t see much good over a two-, five-

Not for turn­ing:

Theresa May, UK prime min­is­ter, ges­tures as she de­liv­ers her key­note speech dur­ing the re­cent Con­ser­va­tive Party an­nual con­fer­ence where she ex­tolled the virtues of Brexit or 10-year pe­riod,” said Mr Gal­lagher, who added that the UK will be­come iso­lated as a re­sult of its exit from the EU.

He said he “could per­haps be per­suaded” by a Brexit ar­gu­ment that the UK will be­come the Sin­ga­pore of Europe.

“I rather think it’s more likely to be Cuba,” he said. The ex­ec­u­tive chair­man also said he would sup­port a se­cond ref­er­en­dum. “I would like the House of Com­mons to just over­turn the whole thing,” he said.

Mr Gal­lagher said that Abbey has been en­joy­ing very high mar­gins in the UK over the past num­ber of years, boosted by the help to buy scheme there.

“The re­al­ity is that mar­gins are in­evitably go­ing to nor­malise,” he said. “Broadly speak­ing, you’ve a low-in­fla­tion en­vi­ron­ment, and mar­gins are be­gin­ning to nor­malise. The dan­ger is that as that process pro­gresses, it also com­bines with other dif­fi­cul­ties in the econ­omy, and if that hap­pens, well then it could be that they go lower still.

“Clearly there’s some fear of that in the mar­ket be­cause the shares of builders have been on a down­ward track for months.”

Per­sim­mon, Bar­ratt and Tay­lor Wim­pey are the UK’s three big­gest home­builders.

“The busi­ness is very, very volatile, and in spite of every­body’s best ef­forts has been up and down like a yo-yo for all my ca­reer and go­ing back for­ever,” said Mr Gal­lagher. “The truth is that spec house­builders have had a good run in Eng­land. We all hope for the soft land­ing, but the soft land­ing is a bit like the Phoenix – of­ten talked about, but never seen.”

Last week, Mr Gal­lagher called for the Vat rate on new houses in Ire­land to be slashed to zero from 13.5pc. He claimed that while such a move would prob­a­bly boost builders’ prof­itabil­ity, it would also spur home­build­ing.

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