Tag Archives: Irish economy

Rip-Off-Ireland Shedding Its Expensive Image

Posted on by
1

The perception that Ireland had become a very expensive country – a rip-off Republic – emerged during the Celtic Tiger boom era of the 1990s and early part of the current century.


Photo From Free Public Domain Photographs

With near full employment (only 4% unemployment at the height of the prosperity – now unemployment is over 14%), staff could afford to pick and choose their jobs, pushing up prices, offering poor value, inflating business costs.

How things have changed. With the Tiger slain the economic crisis that nearly sank the country in 2008 and 2009 has seen earnings plummet, taxes spiral upwards while employment opportunities have disappeared. The result for the Tourist Sector of the Irish Economy has been predictable. Widescale closures of Hotels and Golf Courses throughout the country while the devastating reduction in the standard of living for employees has meant that jobs have become cherished, meaning better customer service and value.

A 2009 Bord Failte survey of visitors to Ireland revealed that as many as 41% of Tourists felt that holidaying in Ireland was too expensive. The most recent survey has seen this figure plummet to 17%.

So what is happening?

Well the first thing that can be said is that with the devastation in the Hotel sector those who remain standing are having to offer ever more enticing deals and room rates to their visitors. Where this has resulted in more people through the Hotel lobby the staff in the hotels are now required to offer better service, and cheaper too.

An increase in advertising by the Irish Tourist agencies with promotions such as ‘The Gathering’ have also helped to drive more visitors into Ireland, whose Dollars and Pounds are going further, a lot further than before. The Currency Exchange rate with the US Dollar has helped too. The Greenback has recovered from the 1.60 ceiling it nearly shattered last year to the 1.30 level it occupies today. It is clearly more affordable and a better overall experience to visit Ireland during its financial humbling.

Visitors from America seem to agree. The Bord Failte survey cited over 50% of visitors from the US as indicating that their visit ‘exceeded their expectations’.

Nothing like a bit of austerity to focus the minds of business owners and staff alike!

by Michael Green
Home Page

Lose Your Cable TV If You Want a Mortgage Write-Down

Posted on by
1

The issue of mortgage write-downs or ‘debt forgiveness’ has been a very thorny one in Ireland ever since the Irish banks effectively collapsed and were taken into state ownership. Thousands of home-owners lost their jobs at about the same time as the value of their property plunged. They found themselves in negative equity, preventing them from selling their now-devalued property and trapping them in apartment blocks and rural housing estates in a vicious circle that is hard to escape.

The realization that a certain level of mortgage write-downs would have to be granted was greeted with a mixture of despair by those who actually managed somehow to pay their mortgage and with an opportunistic ‘nod and a wink’ by those who are trying to ‘game the system’. There is anecdotal evidence that a certain number of home-owners are deliberately not paying their mortgage in anticipation of a deal being struck in the future. This is preventing write-downs being offered to the most deserving of cases, stalling the property market, trapping people in homes they cannot afford.

It is estimated that as many as 100,000 Irish mortgages are now in arrears of at least three months. It is inevitable that deals will have to be done with some if not many of these cases. The banks are unsurprisingly being very cagey. Where home-owners in arrears present themselves to the bank they are being offered longer terms, mortgage holidays, interest-only payments, split mortgages, etc., in an effort to give them some breathing space. For some, even these measures will not be enough.

The new Personal Insolvency Service has laid out a number of concessions that they expect from those desperate for a deal including:

* getting rid of a second car and even trading down to a lesser model of car
* an end to taking foreign holidays
* removal of certain Cable TV services including sports and movies packages
* removal of children from private schools
* ending of private health insurance
* any other obvious ‘unnecessary’ expense

The Personal Insolvency Service is part of the Government’s overhaul of the outdated bankruptcy laws in Ireland. Irish banks are expected to use the new rules and restrictions laid out by the Service in dealing with people seeking mortgage write-downs.

It is likely that these new measures may be tested in the Courts. The spectre of desperate families choosing between private education for their children and private health insurance over keeping their family in their home is likely to be loom large in the national consciousness and soon.

It is a battle that will likely get ever more bitter as the stark reality of a bank-imposed ‘austerity lifestyle’ hits home.

by Michael Green
Home Page

Blow to Economy as Tourists from Britain Desert Ireland

Posted on by
1

The number of visitors from Britain has fallen by as many as a Million visits since 2007 when 3.7 Million trips from Britain to Ireland were recorded.

Six short years ago Ireland was a very different place. The ‘Celtic Tiger’ still stalked the land although his days were numbered. A property market collapse and financial ruin were just around the corner. Britain suffered its own recession too but was spared the carnage caused by the banks that Ireland suffered. Against this backdrop it is perhaps no surprise that visitors from our closest neighbour have decided to opt for sunnier climes.

The Irish Hotels Federation (IHF) are doing everything they can to reverse the trend but are not helped by the high costs they face in running their businesses. Commercial Rates are effectively an extra big tax on their income. Many Hotels are also suffering negative equity in respect of the development of their Hotel property after the market collapsed in 2008. Consequently Hotel rates in 2012 were at their highest level since 2008 according to a Hotels.com survey.

Killarney at 101 euro per night was listed as the most expensive destination for Hotel rooms where the country averaged 90 euro per night. Irish Hoteliers are not at all happy with the survey though, claiming that the cost of rooms has been greatly reduced in recent years despite persistently high costs and that Ireland compares favourably to most other popular European destinations.

Tourism is vitally important to the Irish economy accounting for 5.3 Billion Euro in revenue and employing 11% of the entire workforce of the country.

by Michael Green
Home Page

Government ‘Divide & Conqueror’ Strategy to Test the Resolve of Public Sector Unions

Posted on by
1

A successor to the ‘Croke Park Agreement’ has been finalized that will see cuts of 1 Billion Euro from the Government pay bill. The deal includes pay cuts for all staff, and up to 10% for top-earners, additional hours of work at no extra pay, and reductions in allowances and premium payments.

As many as nine Unions have already indicated that they will not support the new deal and are recommending that their membership reject it. The consequences of being outside of the new arrangements are likely to make for a very difficult situation for the Unions. It is very likely that the Government will unilaterally reduce the pay of those staff who do sign up to the deal, a step that will almost certainly cause strikes.

The Government seems to be playing hardball this time around. The new proposals actually provide for some compensation to public servants in two years time in certain situations, but only to those Unions that sign up to the deal. Those staff who opt out will not receive the agreed compensation. Divide and conqueror seems to be the tactic.

Similarly the deal provides for zero compulsory redundancies for those Unions that sign up – a huge concession given the current unemployment rate of over 14%. Those left outside the umbrella of the agreement however will have no such comfort and may see compulsory redundancies implemented, on top of compulsory pay cuts.

The divisions in the Unions are becoming apparent. The huge Impact Union that represents over 63,000 public servants has recommended that the deal be accepted. The Irish Nurses and Midwives Organisation however is to recommend rejection of the deal to its 40,000 members. Similarly Teachers Unions have rejected the deal. Already a group representing Gardai, Nurses, Paramedics and Fire-Fighters, some 70,00 public servants, has been formed to co-ordinate its opposition to the deal.

The problem with the deal from a Union perspective is that it requires every public servant to take a pay cut. While this may seem reasonable in the case of a person earning over 65,000 euro per year it is a lot harder on lower paid civil and public servants, nurses and front-line staff, many of whom earn less than 30,000 euro annually.

Taoiseach Enda Kenny is determined that the cuts to pay and conditions have to me made:

“Implementing these savings by agreement with public service staff would be another big step on the road to economic recovery, and would send out a signal to the world that the Irish people are determined to fix our economic problems and restore the country to prosperity and full employment.”

It is ‘Game On’ with division, public protest and strikes inevitable.

by Michael Green
Home Page

Debt Deal for Ireland: A Step in the Right Direction?

Posted on by
Reply

The Irish debt deal did not reduce the amount owed by the country. Ireland still owes in the region of 125BN Euro – a staggering figure that will take decades to pay off. The new debt deal merely allows part of the debt to be paid off over a longer term.

This is not necessarily a bad thing if you are able to ignore the immorality of it. By pushing the debt repayments down the road to the year 2053 the current Government has essentially lumbered today’s toddlers with the task of paying their parents debts. On the other hand, the breathing space that will be created by not having to pay as much as 2BN Euro annually over the next 10 years has given the current generation the opportunity to create jobs and growth to repair the damage sooner.

Under the deal the Central Bank of Ireland swapped high-yielding ‘Promissory Notes’ for longer-term Government Bonds. The original deal was to cost over 3BN Euro annually for the next 10 years. The new deal sees a reduction in the interest rate from 8% to 3% and stretches the loan out to 40 years. This reduces the borrowing requirement of the Government in the short term which it is hoped will free up funds for job creation.

The response in Ireland to the news of the deal has been broadly welcoming although those opposed to the whole concept of the Government bailing out the banks to begin with used the opportunity to demand that a write-down of Irish banking debt be sought immediately.

The Fine Gael and Labour Party coalition Government made the point that the European Central Bank has never agreed to debt write-down before so it would have been pointless to even negotiate on that basis. The more militant of those opposing the Government want to see an immediate default on the debt to force the issue with the ECB, EU and IMF.

This may yet happen.

The level of debt being carried by Irish citizens and small businesses is reaching catastrophic proportions. Although the economy of the country has stabilised it is still quite dreadful. Unemployment in Ireland is stuck at over 14%, Irish emigration is at pre-Famine levels and job creation is barely perceptible. The gamble by Fine Gael that they can soldier on in the hope that the economy recovers may backfire under an avalanche of personal debt and mortgage defaults. In such a scenario a massive default on the loans granted to us by our European ‘partners’ will become a question of ‘when’ and ‘how much’ rather than ‘if’.

Against this backdrop the much vaunted ‘Promissory Note’ deal may become just another footnote in this bizarre period of Irish history.

by Michael Green
Home Page

Rate of Unemployment In Ireland Remains High At 14.6%

Posted on by
Reply

The rate of unemployment in Ireland remains stubbornly high within the 14% to 15% range. This bad news has in part been reduced by an increase in the rate of emigration.



The Central Statistics Office has announced that the number of people ‘signing on’ is just under 430,000, down just over 10,000 since the start of 2012. The figures could not mask the increase in the number of those considered to be ‘long-term’ unemployed. Nearly 190,000 of the total unemployed have been claiming benefits for over a year – a 3.3% increase over the year.

The Irish Central Bank estimates domestic growth of only 0.5% in 2013 with GDP growth of 1.3%, a reduction in previous estimates. These numbers do not encourage any belief that the rate of Irish unemployment will decrease any time soon, putting further strain on an Irish economy already struggling with a huge social welfare bill.

European unemployment continues to be a big issue with Spain at a massive 26%, Portugal at 16%, Italy at 11%, France at over 10%, the UK at under 8% and Germany at just under 7%.

source: http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/3-08012013-BP/EN/3-08012013-BP-EN.PDF>

by Michael Green
Home Page

Potential Disaster for Ireland if UK Opts Out of European Union

Posted on by
3

The amount of genuine ‘Euro-skepticism’ that really exists in the United Kingdom is about to be put to the test.



The UK has always had a vocal faction who are very unhappy with the EU. This skepticism ranges from those who want to have their London parliament retain more of its power rather than ceding ever-more to Brussels, to those who want the UK out of the European Union altogether.

British Prime Minister David Cameron has announced that, should his Conservative party be re-elected, a referendum will be held in the UK by 2017. The vote will likely include a number of options and will include an option for the country to completely leave the Union. Britain previously decided to remain outside the Eurozone and retain its own Sterling currency. This proved to be a very wise decision in retrospect, given the financial devastation that the single currency has left in its wake.

Had Ireland retained its own ‘Irish Punt’ currency and thus control of its own Central Bank then there is no way the property bubble that has wrecked the Irish economy would ever have been allowed to grow to the proportions it did. Since interest rates were set by the European Central Bank Ireland was lumbered with low interest rates, cheap loans and a voracious appetite for buying property at precisely the moment it needed it least. Ireland had 1 and 2% interest rates when it should have had 5, 6, and 7% to cool the property market.



While these events are history now, it is with a sense of foreboding that the Irish public and politicians view the vista of our nearest neighbour and largest trading partner actually leaving the European Union completely.

The effects of such a move for Ireland would be wide-reaching. Britain is the export economy upon which Ireland relies most. If trade becomes more difficult or is taxed at a higher rate then the effect on the Irish economy would be severe.

It remains to be seen what the overall response will be from the British public. As David Cameron himself put it:

“The biggest danger to the European Union comes not from those who advocate change, but from those who denounce new thinking as heresy. In its long history Europe has experience of heretics who turned out to have a point.”

Ireland is certainly feeling the pain for having ignored its own heretics who predicted doom when the country joined the Euro currency.

by Michael Green
Home Page

Irish Government Finally Gets Tough on Public Service Pay

Posted on by
Reply

Irish Government Finally Gets Tough on Public Service Pay

The ‘Croke Park Agreement’ is a deal between Public Service Unions and the Irish Government. It broadly states that there the Government will not implement any further cuts in pay for Public Servants in exchange for an increase in productivity and greater flexibility in respect of work practices.

The rates of pay and conditions enjoyed by Irish public servants have been the subject of severe criticism in Ireland in the last few years, especially given the appalling state of the public finances.

A successor to the Cork Park Agreement is being negotiated between the Government and Union officials with both sides taking pot-shots at each other using the media as their weapon. The latest example of such public negotiating was by the Irish Taoiseach (leader, Prime Minister) Enda Kenny. His Fine Gael Party has been criticized for allowing the continuation of the Croke Park Agreement despite the fact that the country is effectively bankrupt. Fine Gael are to a certain extent hamstrung by the fact that they are in coalition with the Labour Party who are adamantly opposed to their core membership enduring any further pay cuts.

Enda Kenny has made it clear that if no agreement is forthcoming then the Irish Government will introduce legislation to enable it to reduce wages and automatic annual increments (pay rises), and to introduce a compulsory redundancy program.



Such a unilateral action would cause difficulties for the Labour Party leader Eamon Gilmore who is already reeling from the criticism his Party has endured after the introduction of the annual Property Tax. He will be hoping that his Trade Union colleagues can strike a deal with his Government that will prevent such a necessity.

Both Fine Gael and Labour have suffered badly in recent Irish opinion polls and it is vital that they are seen to strike a deal that is good for the country.

Edited by Michael Green
Home Page

Irish Water Tax to be introduced in 2014

Posted on by
Reply

A new tax on the private use of tap water is to be introduced in Ireland in 2014. This is despite the fact that most Irish homes will not have an actual water meter installed until 2016 at the earliest. A flat-rate fee will be introduced initially and will be based on the size of a property as well as the number of occupants.

Irish businesses already pay for their water usage but private homes do not, the funding for which comes from general taxation revenue. The new plans to install a water meter in every house in the country have, like the property tax, been greeted with dismay by a population that is already groaning under the weight of a huge and increasing tax burden. It is expected that average annual usage per home would cost approximately 400 euro (approx US$530), with heavier users paying more.

It is broadly accepted that there is a case for charging for water usage. Estimates put the wastage of usable water at over 50% from the country’s creaking and in many cases Victorian water pipes network. Owners of rural houses usually have to sink their own well or else join a water scheme while urban houses do not have any such expense so there is a real urban/rural divide on the issue.

On the other hand Taxpayers can reasonably argue that they already pay for water in their income and sales taxes and are entitled to ask just why they are being told to pay again.

Edited by Michael Green
Home Page

Unexpected Chinese Boost for Irish Tourism

Posted on by
Reply

In the wake of the unexpected blossoming of the Irish whale-watching business the Irish tourist industry is today celebrating another notable boost.

In a surprising boost for Irish tourism the Chinese ‘Oriental Morning Post’ newspaper has declared that Ireland is the world’s best travel destination. A poll conducted by the newspaper was announced at the ‘World Travel Awards’ in Shanghai. The vote of confidence for the Irish tourist experience follows on from the 2012 ‘most charming destination’ award from the Beijing ‘Life Style’ magazine.



As many as two million Chinese tourists visit Europe every year but clearly Irish Tourist businesses want to attract more than the 10,000 Chinese visitors that arrived in 2011. Perhaps the fact that Ireland is located at the very edge of the continent has played some part in the relatively few Chinese visitors over the years. It is hoped that a new visa waiver scheme that has been introduced for Chinese visitors will greatly boost the numbers that visit the shores of the Emerald Isle.

Late last year the Chinese celebrity couple Zhao Ruo Hong and Zhao Yan from Shanghai made the headlines in their native land when they visited Ireland on their honeymoon. Zhao Ruo Hong is vice-president of China’s first wedding website. Zhao Yan is a famous detective writer. Their tour of the Guinness Storehouse, Trinity College, The Book of Kells and then the Cliffs of Moher and the Ring of Kerry read like a travel brochure for Irish tourist chiefs who were clearly delighted to welcome such a high-profile celebrity endorsement.

By Michael Green
Home Page