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Ireland outpaces EU average again with 6.7pc GDP rise

ECONOMIC growth came in at 6.7pc in 2018, and although it slowed in the second half of last year, Ireland has experienced the most rapid growth of any eurozone country since 2014.

Strong exports were once again behind the strong growth seen here, according to data from the Central Statistics Office released yesterday.

However, there were signs that consumer demand was kicking in – even as Brexit loomed – as higher State salaries fed through.

The fourth quarter saw GDP growth slow to 4.9pc from a year earlier and the economy expanded just 0.1pc from the third quarter, largely due to the strong performance in the third quarter.

Despite the slowdown, growth here was still well above the 1.8pc pace recorded in the 19-member single currency bloc.

“Importantly, the growth in the economy is broad-based with positive underlying contributions from both the domestic and multinational sectors,” Minister for Finance Paschal Donohoe said in a statement.

Gross national product, which gives a better picture of the performance of the economy, expanded by 5.9pc and there was growth in investment and government activity as well as in consumer spending.

Exports in the full year rose 8.9pc from 2017 and were the driving factor behind the growth numbers, the CSO said.

Brexit could take a bite out of agricultural and food exports while a slowing eurozone and world economy could hit demand for other exports.

The British export market is worth €14bn a year and Minister Donohoe highlighted the risks to the economy from tariff and other barriers.

“The Brexit cloud hangs over the economy and, as I outlined in January, the impact on the most-exposed sectors of the economy could be severe,” he said.

Farming groups say that an €800m a year market for beef will disappear if the industry loses tariff-free access to the UK and meat from non-EU states is allowed in on the same terms as Irish products.

The economic picture looks set to darken in 2019, largely thanks to Brexit, although growth was expected to moderate to the 4-4.5pc range by most forecasters.

The wild card is Brexit.

Estimates from the Central Bank say that in the event Britain leaves without a deal, growth here could be as little as 1.5pc this year.

Other economic data released yesterday continued to suggest that there were few signs that rising wages were feeding through into capacity constraints in the economy to push inflation higher.

The headline annual rate of inflation was 0.6pc in February, down from 0.7pc in the previous two months.

Meanwhile, the French economy will grow marginally slower this year than previously expected although improving household purchasing power should help limit the impact of a global slowdown, the country’s central bank said on Thursday.

The Bank of France now forecasts growth of 1.4pc this year. The economy there grew 1.5pc in 2018.

Even so, France will easily outperform Germany this year, where growth of 1pc or lower is expected.

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Mortgage arrears dip as court repossessions fall to nine-year low

MORTGAGE arrears figures from the Central Bank show another fall in the overall numbers behind on their payments.

But there is only a small alteration in the numbers in long-term arrears. This is despite the issue persisting for years now.

Court-ordered repossessions are at a nine-year low.

The figures show that overall some 63,246 residential mortgage accounts were in some form of arrears in the last three months of last year.

This was down 1,264 accounts on the previous quarter.

Some 22pc of mortgages in some form of arrears are held by unregulated loan owners, mostly vulture funds.

The Central Bank said the number of accounts that are more than three months behind on payments fell back for the 21st time, with 44,009 accounts falling into this category.

However, the numbers in long-term arrears remain high at 27,551. There was a fall of just 447 in the number of accounts that are classified as in long-term arrears – more than two years.

These homeowners are most at risk of losing their homes.

Other countries do not have statistics for long-term arrears, as homes where there is a mortgage default tend to be repossessed faster than here.

And the data shows a fall off in the numbers getting a payments restructuring deal from their bank.

A total of 111,504 residential mortgage accounts were listed as restructured at the end of December. This was down 2,367 compared with the previous quarter. Just one in three of the accounts that are in arrears have a payments restructuring deal in place.

Some 166 residential properties were repossessed in the three months to the end of the year, up from 161 in the previous quarter. Most of those taken into possession by the lenders were voluntary surrenders, the Central Bank said.

The figures show that there were 28 court-ordered repossessions of primary dwelling houses in the fourth quarter of last year.

This is the lowest quarterly figure since 2010, according to University College Cork economics lecturer Seamus Coffey.

Some 32 residential properties were taken into possession by vulture funds in the quarter.

Lenders sold off 242 properties during the quarter, but still hold 1,500 properties.

Legal proceedings were begun or continued by lenders in a bid to repossess homes on 405 mortgage accounts.

Irish Mortgage Holders Organisation CEO David Hall said the figures needed to be kept in perspective as both Permanent TSB and Ulster Bank recently sold 15,000 loans to vultures funds.

He said this meant repossession proceedings were paused for a period.

“The tsunami is ahead, slowed by judges and county registrars, but ahead it is,” he said.

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Sterling on course for biggest weekly gain in 7 weeks

Sterling was seeing its best week since January, as investors waited for next week’s parliamentary vote on Prime Minister Theresa May’s deal to exit the European Union.

Sterling has rallied this week – it is up 1.7% against the dollar – after British politicians voted against leaving the EU without a deal and backed a delay to the March 29 exit date.

The vote against a no-deal Brexit was non-binding, but investors believe Britain will now avert a disorderly Brexit that would severely damage its economy.

May has said she will hold another vote next week on her deal, although MPs have already rejected it twice.

She hopes to use the threat of a longer delay to Brexit to persuade eurosceptics in her party to back her.

The pound, which has traded between $1.2945 and $1.3380this week, was unchanged this afternoon at $1.3240.

It was also little changed against the euro, losing 0.1% to 85.50 pence per euro.

But uncertainty still looms ahead for sterling.

All 27 EU member states must agree to a request for a Brexit extension, and it remains unclear when and on what terms Britain will leave.

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No tariffs on EU goods coming into NI in no-deal Brexit

The UK will not introduce any new checks or controls on goods moving across the land border into Northern Ireland if the UK leaves the European Union without a deal, it has been announced.

Under a temporary and unilateral regime announced by the British government, EU goods arriving from the Republic and remaining in Northern Ireland will not be subject to tariffs.

However, tariffs will be payable on goods moving from the EU into the rest of the UK via Northern Ireland under a schedule of rates also released this morning.

The British government insists that this will not create a border down the Irish Sea, as there will be no checks on goods moving between Northern Ireland and Britain.

Instead, normal compliance and intelligence methods will be used to detect any traders attempting to abuse the system.

MPs accepted that the new regime will cause “concerns” to Northern Irish businesses and farmers about the impact on their competitiveness.

But they said these were the only steps that could be taken to deliver on the Government’s commitment to avoiding a hard border in the case of no deal.

MPs said that, overall, the changes would represent a “modest liberalisation” of the UK’s tariff regime.

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Consumer spending falls in February

Consumer spending has fallen for the second time in three months, according to Visa’s Irish Consumer Spending Index.

Having risen slightly during January, consumer expenditure was down by 0.6pc on a year-on-year basis.

This was the sharpest reduction in real spending recorded for two years, as falling consumer confidence continues impact spending habits.

The fall in spending comes on the back of growing concerns about the potential impact of a possible no-deal Brexit, as well as research from Bank of Ireland this week, which found that one in three people are “very worried” about their finances.

Meanwhile, last month sentiment among consumers fell to its lowest level since November 2014.

Face-to-face consumer spending fell by almost 4pc year-on-year in February, however in contrast eCommerce spend rose 5.6pc on an annual basis.

Last month consumers increased their spend on household goods and hotels and restaurants and bars, which recorded growth rates of 7.6pc and 6.7pc respectively.

There was also some growth seen in health and education, up 3.2pc, and a modest increase seen in recreation and culture, which recorded growth of 1.2pc.

However, spending fell in all other categories covered by the report, most notably in the traditional retail categories of food and beverages, which was down 1.3pc, and clothing and footwear, down 3.8pc.

This was the first decline reported in the food and beverages sector in 18 months.

The sharpest reduction in spending was for “miscellaneous” goods and services. This segment includes jewellery, health and beauty.

Expenditure in this category was down 5.3pc, a fall that was broadly in line with January’s four-year record fall.

Philip Konopik, Ireland country manager, Visa said: “While the likes of the hotels, restaurants & bars and recreation & culture sectors saw a boost in February thanks to the mid-term break and Valentine’s day, this failed to drive sales on the high street with spending down -3.9pc year-on-year.”

“Overall it represents a sluggish start to the year, so hopefully we will see an uptick in consumer spending to coincide with St Patrick’s day.”

Article Source: http://tinyurl.com/kbwqb42

An Post lines up mortgage market entry as profits rocket

An Post is looking to launch its mortgage product in the spring of next year, it said on Wednesday when announcing a loan product that offers up to €75,000.

At a briefing in the GPO, the company’s head of retail, Debbie Byrne, said its consumer lending product will go live this month, allowing customers to borrow between €5,000 and €75,000 on terms ranging from one year to seven years.

The loan offering is through Avantcard and has a tiered interest rate starting from 8.5 per cent depending on a person’s credit rating.

Speaking to journalists, Ms Byrne said the company’s mortgage product will launch early in 2020.

Ms Byrne’s comments came after chief financial officer Peter Quinn said turnover in 2018 rose 6.8 per cent to €897 million while profit grew from €8.4 million in 2017 to €40 million in 2018.

The company is in the throes of a sizeable investment in its brands and product offering with financial services and e-commerce central to its strategy. With that in mind, An Post is launching a sub-brand called An Post Money, supported by a series of advertising campaigns. In total An Post is spending €5 million on a refresh of its brand. Its new advertising campaign begins this weekend.

Branches
An Post services about 1.5 million customers per week and processed €14 billion worth of transactions last year. It recently closed 152 of its branches, leaving it with over 950 branches across the State. Ms Byrne noted that their will not be any compulsory closures across its network.

“An Post’s move into a new world of e-commerce and financial services has delivered great results in 2018,” chief executive David McRedmond said, adding that its transformation was helped by “fixing our core economics”.

Another key plank of its growth strategy is ensuring that more government services are processed through regional post offices. While a move of the TV licence to Revenue from An Post had been mooted, Ms Byrne noted the organisation grew TV licence revenue by 1 per cent last year, delivering “an additional €1.8 million to RTÉ’s coffers”.

While revenue from mail services has witnessed a global decline, An Post recorded growth of 40 per cent in its parcel business last year with Christmas parcel deliveries up 60 per cent on the previous year.

Garrett Bridgeman, An Post’s managing director of mails and parcels, said the group is now the market leader in the parcel sector in the Republic with a share of over 40 per cent. He added that the company has just invested €15 million in a new parcel automation centre which is due to open in September.

Another new sub-brand, An Post Commerce, has been launched under Mr Bridgeman’s remit to provide solutions for domestic and international businesses.

Article Source: http://tinyurl.com/kbwqb42

One-in-three people admits being ‘very worried’ about their finances

A third of people in this country are “very worried” about their finances.

More than half also have no pension, according to research commissioned by Bank of Ireland.

One in four would not last a month without having to borrow if they lost their main source of income.

The bank is spending €5m this year to roll out a financial literacy programme for customers and non-customers.

A survey of 2,770 people the bank commissioned from Red C found the country has a national financial wellbeing score of 61.

This means that as a nation we are managing financially, but not thriving.

A quarter of those struggling are classed as high earners, so-called ABC1s.

The research found that what people earn does not determine how they cope financially, but how they use the money. Half of consumers do not feel confident about managing their money.

Many people feel financial advice is relevant only to those with large amounts of money to invest, something that money experts would question.

Around one-in-five consumers admits to being regularly overdrawn. The majority of those surveyed said that they hold some form of loan, with one in four saying they have two loans.

“Financial wellbeing is about what you do with your pot of money, not the size of it,” said Gavin Kelly, chief executive of the retail division of Bank of Ireland.

Article Source: http://tinyurl.com/kbwqb42

EU adds 10 countries, including UAE, to tax blacklist

The European Union expanded its tax haven blacklist by 10 countries today, adding the United Arab Emirates and Bermuda despite the objections of powerful member states such as Italy.

The list now contains 15 countries.

It was first drawn up in 2017 in the wake of several scandals, including the Panama Papers and LuxLeaks, that pushed the EU into doing more to fight tax evasion by multinationals and the rich.

Seven countries are to be moved back from a grey list because reform commitments had not been met.

These are Aruba, Belize, Bermuda, Fiji, Oman, Vanuatu and Dominica, an EU statement said.

They are joined by three other countries whose tax policies have grown more aggressive in the past months. They are Barbados, the United Arab Emirates and the Marshall Islands.

Italy long resisted the addition of the UAE.

The Middle East powerhouse has recently made significant investments in the economically troubled European country.

Rome had wanted to keep the Emirates on the so-called grey list of countries that have made pledges to get their tax laws in order with a standard set by Brussels.

“Everything will be solved” when new legislation in passed in the UAE, Italian Finance Minister Giovanni Tria said.

“The Emirates will come out immediately afterwards,” he added.

The operation in “naming and shaming” countries into better tax policies comes only days after a money-laundering blacklist by the EU was torpedoed by the bloc’s own member governments after it included Saudi Arabia.

Article Source: http://tinyurl.com/kbwqb42

Sterling plummets after UK attorney general says legal risks of Brexit unchanged

The pound sank in volatile trading today after Britain’s attorney general said the legal risks of a Brexit deal with the European Union had not changed.

This cut the chances of the agreement getting through the British parliament.

Geoffrey Cox said a revised Brexit deal, secured by Prime Minister Theresa May last night with the European Union, had not given Britain legal means of exiting the so-called Irish backstop arrangement.

Markets had pushed the pound to a 22-month high versus the euro higher before the attorney general spoke.

They had expected him to revise his view of the deal and help win over eurosceptic lawmakers in May’s Conservative Party before this evening’s parliamentary vote on her withdrawal agreement.

With no clear path yet to an orderly British exit from the EU less than three weeks before the official departure date, the pound remains at the mercy of Brexit headlines.

The pound was down 0.9% against the dollar at $1.307 by the evening. It had been as high as $1.3290 earlier in the session.

It also plummeted more than 1.3% against the euro to 86.4 pence after earlier trading as high as 84.755 pence.

Overnight volatility in the pound shot to its highest since shortly after the Brexit referendum in June 2016.

The export-heavy FTSE 100 index rose as sterling dropped.

Britain’s parliament voted down May’s deal by a record 230 votes in January.

Analysts said earlier that sterling was gaining because whether politicians vote for or against May’s deal at the second attempt tonight, the likely outcome will diminish the chances of a potentially chaotic no-deal scenario.

If May loses today’s vote, she will face another vote tomorrow on whether parliament wants to leave the EU without a deal, with a majority expected to refuse the “no-deal” scenario as economically disruptive.

A third vote would then be held on Thursday on whether Britain should request from the EU a limited extension of the March 29 Brexit date.

Traders are expecting big swings in the currency around this week’s votes, according to a sharp rise in one-week implied volatility.

One-week implied volatility measures demand for options to hedge against big currency swings.

A higher percentage reflects greater expectations of currency movements over the next seven days.

Article Source: http://tinyurl.com/kbwqb42

Sterling rises as traders position for Brexit showdown

Sterling rose today in volatile trade as investors braced for parliamentary votes on Prime Minister Theresa May’s Brexit’s deal that could decide on what terms – if at all – Britain leaves the EU in less than three weeks.

No breakthrough emerged from weekend talks between the British government and the EU.

As a result, in a vote tomorrow evening lawmakers are expected to reject – for a second time – the withdrawal agreement May negotiated with Brussels last year.

If that happens, she will face another vote on Wednesday on whether parliament wants to leave the EU without a deal, with a majority expected to refuse the “no-deal” scenario as economically disruptive.

A third vote would then be held on Thursday on whether Britain should request from the EU a “limited” extension of the March 29 Brexit date.

Analysts said that a delay to Brexit would be modestly positive for sterling, reflecting the reduction of the risk of hard Brexit.

However they said it would not completely eliminate the hard Brexit risk which could still come at the end of a delay or as a result of a second referendum.

Sterling was up 1% at $1.315 this evening after falling in the previous eight consecutive sessions. However it was down 1% against the euro at 85.5 pence.

Earlier in the session, the pound fell after a Sun Newspaper report said May would change tomorrow’s key vote on her Brexit deal to a less decisive provisional vote, raising the prospect of more uncertainty for the struggling currency.

May’s spokesman then said the vote would go ahead as planned.

Britain is due to leave the EU in 18 days and the pound has weakened in recent weeks as doubts swirl over how, or possibly even if, Britain’s exit will take place.

Most economists expect Brexit to be delayed by a few months and the two sides to eventually agree a free-trade deal, according to a Reuters poll.

Traders are expecting big swings in the currency around this week’s votes, according to a sharp rise in one-week implied volatility.

One-week implied volatility measures demand for options to hedge against big currency swings.

A higher percentage reflects greater expectations of currency movements over the next seven days.

Article Source: http://tinyurl.com/kbwqb42