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Euro zone inflation slows to 1.4% in March

Euro zone inflation slows to 1.4% in March

Inflation in the euro zone slowed in March, data showed today, amid worries that the European economy is cooling.

The slowdown of inflation comes as signs are multiplying of slower economic growth, especially in powerhouse Germany and the bloc’s second-biggest economy, France.

The rise in consumer prices was less than analyst expectations and dipped away from the European Central Bank’s target of close to, but just below 2%.

Closely tracked core inflation, which strips out volatile energy prices, dropped to 0.8%, in a sign that demand was stalling in Europe.

Last week indications of a weak first quarter for the euro zone mounted as a closely-watched survey pointed to March output being dragged further down by manufacturing weakness.

Manufacturers in the 19-nation single currency bloc “reported their steepest downturn for six years” as pressure mounted from trade wars and Brexit fears, data company IHS Markit said.

This as the ECB added to growth worries when its chief Mario Draghi hinted that interest rates would stay low for longer than previously anticipated, to stimulate growth and inflation.

The unemployment rate in the euro zone remained stable at 7.8% in February, its lowest level since October 2008, the EU’s Eurostat said.

Unemployment in the euro zone has fallen steadily since September 2016, when it dropped below the symbolic threshold of 10%.

It is now near the average rate heading into the 2007-2008 financial crisis, when it stood at 7.5%.

Among the 19 countries that have adopted the single currency, the lowest unemployment rate in February was recorded in Germany at 3.1% and the Netherlands 3.4%.

The highest rates were recorded in Greece at 18% in December 2018, the latest data available, and Spain at 13.9%.

Across the 28 countries of the European Union, the unemployment rate stood at 6.5% in February.

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New car registrations slow down by 5.6% in March – SIMI

New car registrations slow down by 5.6% in March – SIMI

New figures published today show that total new car registrations fell by 5.6% to 16,738 in March compared to the same time last year.

The Society of the Irish Motor Industry (SIMI) figures show that new car registrations for the year to date are down 10.7% to 64,098 compared to 71,760 on the same time last year.

SIMI’s figures also show that new Commercial Vehicle registrations shows a similar picture, with new Light Commercial Vehicle (LCV) registrations down 2.2% to 3,067 in March. In the year to date they are are down 10.7% to 11,182.

New Heavy Commercial Vehicles (HGV) also saw a slight decline of 1.5% compared to the same time last year, and so far this year they are down 3.3% to 886.

However, used or imported cars increased by 9.98% to 8,970 last month compared to a figure of 8,156 in March 2018.

So far this year, used car sales are up 2.74% to 26,832 from 26,117 the same time last year.

SIMI also said that new electric vehicle registrations continue to grow with a total of 1,437 EV cars registered so far this year. It said this has surpassed the total number of EVs registered for the whole of 2018 at 1,233.

Brian Cooke, SIMI’s Director General designate, said that new car sales are being dampened by Brexit uncertainty.

But he also said the increase in VRT on new cars for 2019, arising from the fact that no allowance was made for the first step in the move to the new WLTP emissions testing regime, has also had a negative impact.

Ireland is the only country in the EU that has sought to charge consumers higher registration taxes due to the improved emissions testing regime.

“While the VRT increases in this first phase of the transition to the WLTP test figures only saw an average increase of 5% in the CO2 values, the second phase next year will see these increasing by a further 21%,” Mr Cooke said.

He said that all other Member States have followed the EU Commission view that consumers should not be faced with increased taxation due to the improved emissions testing regime.

“SIMI had warned that not adjusting for such large increases in CO2 values will burden the consumer, damage new car sales and will actually reduce State revenues,” Mr Cooke said.

“This has been the case as the decrease in new cars sales in Q1 has meant that the State’s tax revenues from new cars have fallen by more than €60m so far this year, and this shortfall is only going to increase as the year progresses,” he added.

Today’s SIMI figures show that Volkswagen was the top selling car brands so far this year, followed by Hyundai, Toyota, Ford and Skoda.

The top selling car in March was the Toyota Corolla.

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New Revenue system to hit SMEs for unpaid tax

New Revenue system to hit SMEs for unpaid tax

The Revenue Commissioners will chase more small companies for unpaid tax following the launch of a new high-tech debt management system.

Revenue’s Debt Management Services (DMS), which was brought in last week, uses technology to deal with a wider range of taxpayers.

This will include those who previously may have been too costly to identify and pursue.

A Revenue spokesman said that it would deliver “improved profiling of cases and deliver significant increased capacity to manage and support compliance and tackle non-compliance”.

“The new debt-management system will enable Revenue to review customers with lower turnovers on a more regular basis.”

Debt to revenue includes annual taxes, such as self-assessed income tax and corporation tax or taxes paid on a periodic basis such as Vat or PAYE.

The technology also offers more flexibility for phased repayments, however.

“The new system is fully online, allowing documentation to be uploaded electronically. It provides much quicker turnaround times for clarifications.

“It also gives customers greater flexibility to manage their payment schedule and make certain alterations to suit their circumstances,” said the spokesman.

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Energy bills going up for 1 million customers

Energy bills going up for 1 million customers

Over 1 million energy customers will feel the impact of larger bills from today.

Electric Ireland and PrePayPower are increasing their gas and electricity prices by 4% and 3.9% respectively, having frozen them over the winter months.

The increase will add around €38 a year to the average Electric Ireland customer’s electricity bill and €30 a year to the average gas bill. Meanwhile PrePayPower customers will see their annual electricity and gas bills increase by around €50 and €35 respectively.

Electric Ireland has just over 1.1 million electricity customers and around 140,000 gas customers. PrePayPower has around 140,000 electricity customers and 40,000 gas customers.

Both suppliers, as well as most of the other energy suppliers increased their prices last year.

Daragh Cassidy, Head of Communications at price comparison and consumer website, Bonkers.ie, said the main reason for the increases is that the price of energy on international markets still remains high.

“We import a huge amount of our energy from abroad,” he said. “We import gas, coal and oil, and unfortunately all of those fossil fuels are increasing in price and still remain very, very high on international markets. Unfortunately, this means that further price increase cannot be ruled out in the months ahead.”

Mr Cassidy said renewable energy will not necessarily be cheaper. ESB is investing in wind energy but investment costs money.

“Renewable energy is greener, it is cleaner but it is not necessarily cheaper energy yet, so just because we are using more renewable energy doesn’t mean that’s going to lead to lower bills just yet.”

Energy suppliers save their best prices for new customers, but asked if existing customers should contact their supplier and negotiate a better price, Mr Cassidy said it is worth the call.

“Obviously we would recommend that people switch, but there is a lot to be said for contacting your existing supplier as well, and seeing if you can negotiate a better deal. Sometimes we find that the retention offers that suppliers give, are not quite as good as the offer that they give new customers.”

Customers could save over €400 annually on gas and electricity by switching.

Another way to lower energy bills is to consume less. Customers can do this by figuring out which appliances in their home use the most energy and then looking for ways to reduce their consumption.

“Installing LED lightbulbs, which use up to 90% less energy than a standard light bulb, will save customers money too”, says Daragh.

Finally customers can look at ways to make their home more energy-efficient.

“For example putting in solar panels or installing attic or wall insulation. And the good news is that there are lots of grants available from the SEAI (Sustainable Energy Authority of Ireland) to help cut down on costs.”

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Manufacturing growth holds steady as Brexit boosts inventories – PMI

Manufacturing growth holds steady as Brexit boosts inventories – PMI

Manufacturing activity grew at an almost identical rate in March compared to a month earlier, as further stockpiling ahead of Brexit mostly offset a dip in the level of output growth, a new survey shows.

AIB’s manufacturing purchasing managers’ index stood at 53.9 in March, down slightly from 54 in February, but extending the run of consecutive monthly growth to almost six years.

The reading also remained above the more than two-year low the survey fell back to in January and well ahead of the flash March reading for the euro zone as a whole, which sank to a near six-year low of 47.6.

While Ireland’s fast growing economy has weathered the uncertainty created by Brexit, thes survey showed that manufacturers were ramping up their preparations as Brexit approached by adding to their pre-production inventories.

The sub-index measuring stocks of purchases rose further to 56.4 in March from 55.6 in February.

This was another new high in the 21-year history of the survey as its authors pointed to anecdotal evidence from companies that they had brought forward stock purchases to secure supplies in the event of disruption.

That all but made up for the dip in the level of output growth last month, although new business from abroad also increased at the fastest pace in four months, amid some reports of greater demand from UK firms.

“Overall, the continued strength of the Irish Manufacturing PMI is very notable given the loss of momentum in the sector globally in recent months, especially in Europe,” AIB’s chief economist Oliver Mangan said.

“It augurs well for the growth prospects of the Irish economy this year,” the economist added.

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Irish shipping industry booming amid Brexit fears

Irish shipping industry booming amid Brexit fears

The Irish shipping industry has seen a marked increase in business as companies bypass British ports amid Brexit fears.

Irish ports have been forced to adapt quickly and increase capacity for direct sailings to continental EU ports as manufacturers increasingly see Irish ports like Dublin and Rosslare as an alternative to the landbridge.

The landbridge is the UK transit route linking Ireland and mainland Europe, and an estimated 150,000 Irish trucks and three million tonnes of goods travel through the UK for export to the EU each year.

Currently, two-and-a-half times more goods move on direct routes from Dublin than via the UK landbridge, and that number is expected to increase.

Dublin Port has announced that CLdN, the Luxembourg-based short-sea Ro-Ro shipping company and owner of the ‘Brexit Buster’ MV Celine, has added its newly built ship MV Laureline onto its direct Ro-Ro freight service from Dublin Port to the ports of Zeebrugge and Rotterdam.

CEO of Dublin Port Eamonn O’Reilly said: “We’re starting to see alternatives developing, options over the landbridge as people grow concerned about the issue”.

“We’re starting to see more fast moving consumer goods which in the past would’ve been guaranteed access to the Irish market through the UK, we’re now seeing a switch, these goods are coming directly to Dublin from continental Europe.

“Those companies who don’t need to use the UK are beginning to avail of those options, and make sure they have established commercial relationships to be able to move goods no matter what happens with Brexit.

“The shipping industry can adapt very quickly, the one thing Brexit is not going to do, it’s not going to increase the number of goods flowing in and out of Britain.

“So if there are ships going in and out of Britain that don’t have enough business, they can easily run in and out of Dublin.

“The shipping industry can redeploy ships at very short notice to make up any shortfall, and respond to increase in demand.

“The growth in Dublin port has been phenomenal. Over the last six years alone we’ve seen 36% growth, and we anticipate that demand for direct services between Dublin Port and continental Europe will increase further after Brexit.”

Today, the original “Brexit day”, the MV Laureline left for the port of Zeebrugge in Belgium.

The third in the fleet from the Luxembourg-based shipping company CLdN to service Dublin, the addition increases the company’s capacity by 20%, bringing the possible number of sailings to seven a week.

A spokesman for CLdN said: “We have taken a long-term view on Dublin Port and invested accordingly.”

The port says the addition of the “super ferry” is a vote of confidence in Irish ports amid the Brexit chaos.

Intensifying discussions between Ireland, the UK and the EU on preparing for the impact of a no-deal Brexit are currently under way.

Ferry company begins no-deal Brexit sailings across English Channel

A ferry company has begun operating extra services as part of a £46.6m UK taxpayer-funded no-deal Brexit contract.

The first of 20 additional weekly cross-Channel sailings by Brittany Ferries departed Portsmouth for Le Havre at 8am.

The firm said it was too late to cancel the extra crossings despite the UK’s withdrawal from the EU being postponed.

Brittany Ferries, DFDS and Seaborne Freight were awarded contracts totalling more than £100m in December to lay on additional crossings to carry critical products and ease the pressure on Dover in the event of a no-deal Brexit.

The controversial process put in place by the UK’s Department for Transport has already seen a row over the collapse of the deal with Seaborne Freight, which had no ferries, and a £33m out-of-court settlement with Eurotunnel.

The six-month deals are aimed at securing the supply of goods such as medicines for humans and animals, vaccines, infant milk formula, organs for transplants and chemicals for the energy industry.

Brittany Ferries is running extra crossings between Portsmouth and Le Havre; Poole and Cherbourg; and Plymouth and Roscoff.

The change in its schedules altered the travel plans of more than 20,000 passengers with existing bookings.

The company outlined some of the costs it has incurred as a result of the contract with the Department for Transport.

It said in a statement: “As a consequence of increasing the frequency of sailings, we are committed to higher fuel costs. Our ships will sail an additional 2,000 nautical miles every week. We are also committed to higher port fees.

“Fifty additional Brittany Ferries’ port staff have been hired on both sides of the Channel to deal with more frequent port calls. We have also spent the last three months training current on-board teams.

“The reality is that we were committed as soon as we signed the contract and preparations began to deliver the dedicated NHS shipment channel. There is no turning back at this late stage because all the preparatory work is now in place for March 29.”

The firm added that it is using its “best endeavours” to re-sell freight capacity unused by the Department for Transport, to reduce costs to the taxpayer.

A spokeswoman for DFDS would not confirm if it was running extra crossings, after the company was awarded a £42.5m Brexit contract.

A British government spokeswoman said: “Leaving with a deal is still our priority, but as a responsible government it is only right that we push on with contingency measures.

“The government’s freight capacity contracts run for six months and are a vital part of wider contingency planning. They provide capacity for critical goods, including vital medicines, to continue to enter the UK in a no-deal scenario.

“Due to the agreed extension until 12 April, tickets for the first two weeks have been released for sale on the open market, which will minimise costs for the taxpayer.”

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Asking property prices continue to moderate in 2019

Asking property prices continue to moderate in 2019

House prices are still rising, but they are doing so at a slower rate, according to a new report from property website Myhome.ie.

The Myhome.ie report showed that the trend of downward house price inflation – first noticeable in the second half of 2018 – has continued in the first quarter of 2019.

The report, which is published in association with Davy, found that annual asking price inflation is now just 3.3% nationally and 1.1% in Dublin. This is down from 6% and 3% respectively in the fourth quarter of 2018.

Asking prices for newly listed properties nationally increased by 2% in the first quarter of the year, while they rose by 1.4% in Dublin.

This means the median asking price for new sales nationally is just over €270,000, while the price in Dublin is €380,000.

Conall MacCoille, chief economist at Davy, said the slowdown in price inflation, which was concentrated in Dublin, was largely due to the Central Bank’s lending rules and unrealistic price expectations rather than uncertainties caused by Brexit.

“At the beginning of 2018, the median loan-to-income (LTI) ratio among first-time buyers in the capital was already 3.5 times income and therefore close to the regulatory threshold,” he said.

“The tightening of the Central Bank of Ireland mortgage lending rules – and the resulting slowdown in price inflation – was always going to be felt first in the capital,” the economist stated.

“It also appears that price expectations in early 2018 were unrealistic and a period of adjustment has taken place as a result,” he added.

The report’s analysis also showed that the slowdown has been concentrated in the most expensive property types and areas.

It said the median asking price for four-bedroom detached houses in Dublin is flat on the year at €650,000.

But prices for one-bedroom apartments are up 10.5% on the year to €210,000 while the price of two-bedroom apartments are up over 8% across Dublin.

“Despite the current slowdown, we still expect Irish house prices nationally to rise by 4% in 2019”, Mr MacCoille said.

The report also noted that there are few signs yet that Brexit is holding back transactional activity.

Residential transactions grew by 4% in 2018 to 57,000 and the report estimated that volumes in January and February were also up 4% on the same period last year.

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Intreo reform had little impact on Live Register, says ESRI

Intreo reform had little impact on Live Register, says ESRI

Intreo one-stop-shop unemployment services introduced six years ago made no difference to the rate of people moving into jobs within a year compared to the previous regime.

This is according to a new study by the Economic and Social Research Institute.

The research also found that the 2012 Intreo job activation reforms had no impact on the probability of jobseekers entering education, training or employment placements.

It found that any improvement in Live Register figures was probably due to more efficient systems weeding out inappropriate or invalid claims at an early stage.

However the authors of the report cautioned that the study based on data from 2011-2014 could only measure short-term effects after the implementation of the reforms, and that potentially better – as yet unresearched outcomes – in the longer term cannot be ruled out.

Up to 2012, jobseekers had to interact with three separate government organisations to access social welfare benefits and employment services.

However, in that year services were merged into one-stop-shop centres called Intreo in a bid to deliver a more efficient and targeted service and better respond to jobseekers’ needs during the recession.

The Department of Employment Affairs and Social Protection (DEASP) commissioned this ESRI research to examine whether the reforms increased the likelihood of newly unemployed jobseekers progressing to employment, entering education, training or employment placements, or moving on to some other destination.

It compared the outcomes of newly unemployed jobseekers from April 2011 to June 2012 (prior to the reforms) and from April 2013 to June 2014 (after the reforms were implemented).

The ESRI study found that in terms of moving into jobs, the Intreo reforms had no effect.

It also found no consistent evidence that Intreo had an impact on exits from the Live Register to employment or education.

The ESRI detected some evidence to suggest that the Intreo reforms led to jobseekers exiting the Live Register – but that was largely due to administrative efficiency in dismissing invalid claims.

The ESRI noted that the reforms focused on streamlining benefit receipt and employment services, rather than on “fundamentally modifying” the nature of the services provided.

It said that in light of this, it is not surprising that the study found the impact on exits from unemployment are “not substantial” – and that the changes have been in the area of efficient administration of public employment services.

The ESRI suggested Live Register exits may have been driven by efficiency gains for the DEASP, through the early identification of invalid unemployment claims under the new system.

It also criticised some of the data which it sought for the research as unusable.

ESRI researcher Elish Kelly, who co-authored the report, said that while the Intreo reforms to Ireland’s public employment services were welcome, going forward continuous monitoring of supports for jobseekers was important to ensure that the needs of unemployed people are being met.

The report was co-authored by Elish Kelly, Seamus McGuinness, Paul Redmond, Michael Savage and John R Walsh.

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New €300m Future Growth Loan Scheme for SMEs

New €300m Future Growth Loan Scheme for SMEs

A new loan scheme for SMEs and farmers will see €300m being made available for them to support their strategic long-term investment plans after Brexit.

SMEs will be able to apply for loan eligibility through the Strategic Banking Corporation of Ireland from April 17.

Three finance providers – AIB, Bank of Ireland and KBC – are participating in the scheme, while negotiations are ongoing with another two.

The scheme, which is delivered in partnership with the EIB Group and the European Commission, was first announced in Budget 2019.

The Government said it was urging businesses to use the next three weeks to start preparing their proposals for long-term capital investment.

The loan scheme will make €300m available to eligible businesses with up to 249 employees at an interest rate of 4.5% or less for loans up to €249,999 and 3.5% and less for loans greater than or equal to €250,000.

Launching the scheme, the Minister for Business, Enterprise and Innovation, Heather Humphreys, said that with Brexit on the horizon, investment in innovation and diversification has never been more important.

“Even if firms are unsure if they will draw down a loan, it’s a good idea to have approval in place in case it’s something they need down the line. Notwithstanding the uncertainty that comes with Brexit, it’s better to be safe than sorry,” the Minister stated.

The Minister for Agriculture, Food and the Marine, Michael Creed, said the new scheme is a long-awaited source of finance for young and new farmers, especially those who do not have high levels of security.

Minister Creed also said it will also serve smaller-scale farmers, who often do not have the leverage to negotiate for more favourable terms with their bank.

He added that food companies have identified long term investment finance of up to ten years as a critical need which is currently unavailable in Ireland.

Food Drink Ireland, the Ibec group representing the food and drink sector, has welcomed news of the €300m loan scheme.

Paul Kelly, FDI Director, said that the lack of long-term investment financing has been a critical issue for food companies and farmers.

“This welcome development will make it more feasible for companies to invest in enabling technology, plant renewal and expansion, refinancing, market development and innovation, particularly in a post Brexit environment,” he added.

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Significant increase in the number of new mortgages approved in Febraury

Significant increase in the number of new mortgages approved in Febraury

New figures show there was a significant increase in the number of new mortgages approved by banks in Ireland last month.

According to the data from the Banking and Payments Federation of Ireland, the number of mortgages given the green light during the month rose 7.2% compared to the same month a year earlier.

An increase of 10.8% in the number of approvals was recorded compared to January of this year.

In total, home loans worth €757m were given the go-ahead during February, up nearly 13% compared to January and almost 10% versus a year earlier.

First-time buyers accounted for a little over half that amount with mover purchasers making up nearly a third of the total value.

The data also shows that re-mortgage and switching approvals rose on a year-on-year basis by 1.8% in volume and by 4.3% in value terms.

There were 45,775 mortgages approved in total over the 12 months to the end of February and those loans were valued at €10.175bn.

Despite the strong month, across the year total annualised mortgage approval activity only increased in volume by 0.50% and by 0.66% when it come to value.

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