Apocalyptic Brexit predictions starting to look hollow,
PASCHAL Donohoe has been warning about the dangers of a no-deal Brexit, saying around 40,000 Irish jobs would go. His dark warnings are grounded in various studies conducted since that awful day in June 2016 when the Brexit referendum was passed in the UK.
But his timing about the appalling vista of a chaotic British exit from the EU is intriguing. It came just 24 hours before the latest economic forecasts which showed the Irish economy would once again grow at the fastest pace in the EU this year.
It also comes while he is trying to dampen down expectations for the budget in October. Donohoe knows there are already higher spending commitments totalling over €2.4bn and enormous demands for everything from public sector wage increases to tax cuts.
He may also have had another issue in the back of his mind as he delivered the warnings about a no-deal Brexit.
Despite Theresa May’s clear-out of several hard Brexiteers in her Cabinet, there is still a strong chance that she will not be able to deliver on a backstop agreement that is fully compliant with the bullet-proof border deal described by the Government last December.
Her White Paper on the future relationship between the EU and the UK is definitely a much softer version of Brexit and if acceptable to the EU it might deliver a virtually checkpoint-free border with the North.
However, the backstop talks are running separately but in parallel and her point has validity that the deal outlined in the White Paper would negate the need for the backstop to ever be introduced.
But problems and uncertainties abound. The EU is likely to shoot down large sections of her plan and force her into further concessions. The White Paper proposal, for a freetrade deal in goods but not services, would go a long way to ensuring an open border and protecting Irish exports to Britain, but it will be seen in Brussels as cherry-picking the benefits of the single market.
Perhaps Donohoe knows there will have to be some sort of horse-trading on the backstop and the Government wants to emphasise the car-crash consequences if Ireland were to dig in and prevent a deal from going ahead at all. At least now, Michel Barnier and his Brussels team have a working document with which they can engage, but so much of the detail has yet to be worked out.
Boris Johnson may be “forgotten but not gone” in all of this as he and his crew plot to crumble the soft Brexit, perhaps in a parliamentary vote at the end of negotiations.
Surely, sinking the deal in a House of Commons vote wouldn’t so much plunge the UK into a no-deal exit, as ensure the status quo remained for longer.
In total confusion, keep calm and do nothing. Eventually, a few years from now the British could give up on the whole idea of leaving in the first place.
On balance the White Paper proposals are good for Ireland on the trade in goods. If services were not subject to a free trade agreement it would be bad for the City of London and other sectors such as insurance, communications, legal services, consultancy and IT services.
These are all major British export services. The UK exported services worth £279bn in the 12 months to May 2018. Around 44pc of those went to the EU. A hard Brexit for services, which the White Paper proposes, would enable the UK to negotiate its own deals on services with third countries.
Its commitment to stick to EU regulations and standards on goods, would effectively prevent it from doing trade deals with third countries on products.
So much for the Brexit campaign rhetoric of England making lots of new products and selling them to the world through new trade deals.
Food and agriculture products would be part of the free trade deal and British farmers would be insulated from a flood on the UK market of cheaper sub-standard food products. No chlorinated chicken either.
But farmers in Britain and the North will still be reliant on the British government replacing their EU payments with matching money from London. Can they trust this or future British governments to maintain that level of subsidy for years to come? No way.
Brexit has many more twists and turns but for Ireland, at least it seems to be heading broadly in a “less worse” direction.
Investors price in more strike trouble for Ryanair
GETTING into a row with pilot trade union representatives over where talks should be held didn’t do Ryanair management any favours. It smacked of an old-style approach.
By all means the company should negotiate hard if it feels it has taken all reasonable steps to meet trade union demands, but fighting over a venue showed that perhaps management were comfortable with the worst the union could do.
This comes back to the question asked when Ryanair agreed to first recognise trade unions. How much would trade union recognition cost the airline? Back in December analysts estimated that Ryanair’s cost per passenger was around €27 excluding fuel, which was 50pc lower than that of EasyJet. A shortage of pilots meant pay rates were going to go up anyway. The airline was already expecting higher fuel prices and estimates were that it would pay around €300m extra for fuel and €100m extra to staff this year. In the end last week’s opening shot in industrial action led to the cancellation of just 30 flights. The union ballot allows for a series of one-day and two-day stoppages, so further strikes are likely unless the issue is resolved.
And there could be more elsewhere. VC, the German pilots’ union, is balloting its members for industrial action. The British Airline Pilots’ Association has submitted its own pay claims which could lead to a dispute. Cabin crew unions in Portugal, Spain, Italy and Belgium are planning one-day industrial actions later this month.
Perhaps the market believes it will ultimately lead to payouts and costs greater than €100m. Ryanair shares have fallen by 76c since the start of July, knocking €800m off its market capitalisation.
And this may be just the first wave.
Selling residency too cheaply
THE Chinese are coming. Well it seems the wealthy ones are anyway. The Hurun Institute conducted a survey of hundreds of high net worth Chinese who are looking at emigrating. They listed Ireland as the thirdbest destination to locate. Businesspeople from abroad can apply for residency in Ireland under the Immigrant Investor Programme by investing €1m in an Irish enterprise, or €1m in particular investment funds, or €2m in a stock market-listed Reit.
Last year there were 329 applicants for the scheme, and 313 were from China. The Government cut the basic requirement from €1m to €500,000 and it prompted a flood of applications. It has since been put back up.
When first introduced in 2012 the take-up was very small despite being able to invest just €450,000 in a hotel and €500,000 in a specified Irish bond. I have heard of reports of applicants pooling together to buy individual suites in hotels valued at €450,000 each.
The Hurun Institute estimates there are 1.47 million individuals in China with a qualifying net worth. It estimates that 37pc of them want to move abroad.
If it led to an influx of capital for startup or growing small firms, great. But sticking €2m into a stock market property Reit? Surely we are selling our residency very cheaply.