News Archives - Page 2 of 308 - Pat Carroll PCCO - Chartered Accountants & Tax Advisors

Numbers on Pandemic Unemployment Payment fall as economy picks up pace

The number of people receiving the Covid-19 Pandemic Unemployment Payment has fallen from 439,000 last week to 412,900.

This marks a decline of 26,100 over the last seven days, according to the latest figures from the Department of Employment Affairs and Social Protection.

However, 63,000 PUP recipients have closed their claims in the last seven days – the largest such figure since the crisis began.

When a time lag for closing claims is factored in, this signals that the PUP figures are set to fall even further over the coming weeks. 

44,800 of this week’s recipients will receive their last payment tomorrow as they are returning to work.  

However as new “two-tier” rules take effect, over 110,400 PUP claimants who were earning less than €200 a week gross before the €350 a week PUP was introduced on March 16 will tomorrow see their weekly welfare payment fall to €203.

This is equivalent to Jobseekers Benefit.  

The Department stressed that while these recipients will lose €147 a week, they will still be receiving more than their pre-Covid earnings – and that all claimants who earned more than €200 remain eligible for the full €350 PUP support. 

In addition to those still claiming the PUP as of the end of June, a further 220,900 people are on the Live Register.

This means that 633,700 people remain totally dependent on the state for income support.  

A further 410,000 workers are having their incomes subsidised by the state under the Temporary Wage Subsidy Scheme.  

When all three categories are combined, 1,043,700 people remain fully or partly dependent on the state for income support. 

The Minister for Social Protection, Community and Rural Development and the Islands Heather Humphreys said that while the PUP continues to provide financial support to almost 413,000 out of work due to the coronavirus, today’s figures indicate that the re-opening of the economy is “picking up pace”. 

She described the fact that 63,000 people had closed their claims in the last week alone as “very encouraging”, noting that with Phase 3 of the Re-Opening Ireland Roadmap underway, an increasing number of businesses are now beginning to start back again.  

“In the last week we have seen the highest number of people return to work in a single week since the crisis commenced,” she said. 

“The Government has set employment recovery as its top priority and my Department and I will work hard to help everybody who lost their jobs due to Covid-19 take advantage of the jobs stimulus package to be announced later in the month and to get back into work without delay,” the Minister said. 

The top three sectors in which employees are returning to their workplaces are Accommodation and Food Services, “Other Sectors” (including hairdressers and barbers), Wholesale and Retail Trade/Repair of MOtor Vehicles and Construction.  

The largest age cohort getting back to work are aged 35-44. 

Today’s Department’s latest figures also reveal that to date, 52,000 people aged up to 66 have been medically certified to receive the Covid-19 Enhanced Illness Benefit of €350 per week. 

Of those just over 7% (3,709) had actually contracted the virus, while the remaining 93% (48,244) were acting on medical advice to not attend work on a precautionary basis.  

Since the beginning of June, 104 people were medically certified as having the virus, while a further 946 were medically certified to self-isolate on a precautionary basis. 

893 people are currently receiving a Covid-19 related Illness Benefit payment. 

The sectors with the highest number of employees certified to receive the Enhanced Illness Benefit are Human Health/Social Work (11,700), Wholesale and Retail Trade (11,000), and Manufacturing (7,000).

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NTMA to auction three different bonds this week

The National Treasury Management Agency said today it plans to raise between €1-1.5 billion through the sale of seven, ten and 30-year debt on Thursday. 

The NTMA has raised €18.5 billion from bond issuance so far this year from a €20-24 billion funding range.

Its target was increased earlier this year to shore up government finances after the coronavirus pandemic.

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Irish services sector sees partial recovery in June

There was a partial recovery in the country’s services sector in June, according to AIB in its latest purchasing managers index.

The business activity index rose to 39.7 from 23.4 in May, a level consistent with ongoing weak activity in the sector.

The index measures activity on a scale of 1 to 100 with the 50 break even point separating contraction from growth in a sector.

The June report, however, saw gains for all sub-components, suggesting the most severe phase of contraction has passed.

There was also a marked improvement in the 12 month outlook, which turned positive having been at subdued levels over the previous three months.

AIB chief economist Oliver Mangan said stronger PMI data was expected from July onwards as the economy reopens.

“The June reading for Ireland is below the flash Services PMIs for the same month in the euro zone, UK and US of circa 47. This reflects the much more cautious approach of the Irish authorities to lifting lockdown restrictions compared to elsewhere,” he said.

“The July Service PMI data should capture the later re-opening of the Irish economy, especially in the hospitality industry,” he added.

The Services PMI had peaked at a two-year high of 59.9 in February.

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Central Bank warns economy could shrink by up to 14%

The Central Bank has said the economy could shrink this year by up to 14%, while it has also warned that unemployment could average as high as 17% this year. 

In its latest Quarterly Bulletin, the Central Bank also highlighted the risks to the economy of a no-deal Brexit. 

The Central Bank has said there is considerable uncertainty attached to its forecasts.

It believes GDP could fall this year by 9% under its baseline scenario and 13.8% under its “severe” scenario. GDP will not get back to 2019 levels until 2022.

It cautions that any recovery will still be tempered by precautionary behaviour and continued social distancing.

Labour intensive activities such as retail, food and beverage, accommodation, tourism and travel will be worse hit.

It points out that continued strong growth in the Information & Communications Technology (ICT) and pharmaceutical sectors have offset declines in other parts of the economy.

In the labour market, the quarterly bulletin forecasts that unemployment will remain between 14.5% and 16.6% this year.

It finds that at the peak of the Covid restrictions in mid-April, 72% of workers in the accommodation and food service sector were in receipt of the Pandemic Unemployment Payment (PUP) and over half of all construction workers.

Since then the number of construction workers on the PUP has declined by 42%.

However, very few jobs have been regained in the accommodation and food service sector with only an 8% decline.

This may improve after this week’s stage of reopening restaurants and bars.

The bank also notes a massive increase in savings.

Deposits were up €3.5 billion in April and €1.5 billion in May. This compares to monthly averages of just under €600 million pre-pandemic.

There has also been a corresponding decline in the demand for credit.

The glut of savings, the bank said, could provide a resource for a consumer-led recovery.

Early data from the start of June show card payments recovering close to 2019 levels after falling 30% in April.

Card use has been boosted by a decline in cash with ATM withdrawals down by between 40-50% year-on-year.

More companies are also developing an online presence, with a 40% increase in IE domain name registrations since March.

The bank notes the continuing uncertainty surrounding Brexit.

It says the immediate impact of a no-deal is hard to quantify but that over time, GDP could be reduced by between 3.5% and 5%.

It notes that the Covid-19 pandemic may have hampered firms’ efforts to diversify into new markets away from the UK and will also have made them more financially constrained.

“While additional policy measures may be required to give some impetus to recovery, it will be important, in due course, for the Government to provide for a clear and credible return to much lower and sustainable deficit and debt positions,” Mark Cassidy, Director of Economics and Statistics at the Central Bank said.

Minister for Finance Paschal Donohoe said the challenges Ireland faces are great in relation to incomes, jobs and peoples’ futures, but “we have the measure of it”.

He said the country faces a long and difficult journey, but “we will be able to complete it”.

Speaking on RTÉ’s Morning Ireland, Mr Donohoe said the PUP and wage subsidy schemes will not come to an abrupt end, but decisions will need to be taken by the Government.

He said no decision yet has been made on VAT for the hospitality sector.

He said everything is under review and that he understands how vital the sectors are to the economy.

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Number of insolvencies down 12% as Covid-19 impact not fully materialised

There was a reduction in the number of company insolvencies in the first six months of this year, according to new figures from Deloitte.

Today’s figures suggests that the impact of Covid-19 has not fully materialised. 

Deloittes said there were 273 company insolvencies between January and the end of June, a reduction of 12% on the same six month period last year. 

Although many companies – particularly in the retail and hospitality sectors – were closed for weeks or months, they have been assisted by state supports including the government payment schemes and the freezing of certain fixed costs. 

However, that situation is expected to change in the months ahead as businesses reopen and the state gradually withdraws the supports. 

David van Dessel, Financial Advisory partner at Deloitte, said insolvencies were expected to increase in the latter part of this year and next year. 

He appealed to companies experiencing challenging trading conditions to take early action so they can avail of the greatest range of options, including refinancing and restructuring  

“The sustained loss of trade (in recent months) will likely prove very damaging for many businesses and some will not be in a position to continue trading as a going concern,” Mr van Dessel said. 

In addition, mandatory social distancing measures as well as changes in consumer behaviour and sentiment will likely bring fresh trading challenges for businesses to overcome,” he said. 

“While the current insolvency numbers already indicate that the retail and hospitality sectors are experiencing more insolvencies than in previous periods, these numbers are expected to increase throughout 2020 and into 2021,” he warned.

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NTMA due to hold two bond auctions in third quarter

The National Treasury Manangement Agency said today it plans to hold two bond auctions in the third quarter of this year.

The NTMA said it will hold bond auctions on July 9 and September 10.

The agency is also planning three Treasury Bill sales and these are pencilled in for July 16, August 20 and September 17.

The NTMA continues to move towards its annual funding target of up to €24 billion to shore up government finances to deal with the coronavirus pandemic.

It has raised €18.5 billion from bond issuance so far this year.

In April, the NTMA announced a revised bond funding range of €20 billion to €24 billion for the full year, to meet the extra borrowing requirements of Government measures during the Covid-19 pandemic.

That replaced the original bond funding range, announced in December, of €10 billion to €14 billion.

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NAMA completes transfer of €2 billion to Exchequer

The National Asset Management Agency has completed its transfer of €2 billion to the Exchequer.  

The sum represents half the expected surplus from NAMA’s operations.

The agency made the announcement at the publication of its annual report today. 

The expected balance of an additional €2 billion will be paid over the next two years. The total contribution of NAMA to the Exchequer over its lifetime, including taxes, is expected to be €4.4 billion.

NAMA’s  annual report noted that in March of this year the agency completed the purchase of its outstanding bonds and the 51% of its shares held by private financial institutions. 

It is now debt free and 100% owned by the Minister for Finance.  

The shareholders included life assurance companies, investors and the Church of Ireland Clergy Pension Fund. 

The terms under which NAMA was established entitled the shareholders to receive an additional 10% on their original investment capped at €5m. 

They were repaid €56.1m and also received an annual dividend over the course of their investment equal to the yield on 10 year Irish government bonds. This has totalled over €14m. 

The report also noted that since 2014, the agency has directly funded the construction of 11,860 homes and indirectly funded 5,520. 

An additional 2,250 are under construction or have had funding approved. Another 8,100 are currently in the planning system. 87% of the homes are in the greater Dublin area while 2,614 homes are for social housing.  

The loans of 198 debtors are still under the management of NAMA. 124 are “in support or forbearance strategies” and legal action is being taken against 74, today’s report reveals. 

NAMA today also reported an after-tax profit of €265 million for 2019 – its ninth consecutive year of profitability. The agency is due to be wound down by 2025. 

NAMA’s chief executive Brendan McDonagh said that 2019 was another year of excellent progress, as it made a profit for the ninth year in a row and paved the way for delivering its first payment of €2 billion to the Exchequer.

But he added that notwithstanding its progress, NAMA is “alert” to the economic risks created by Covid-19 and will be vigilant in the way its seeks to mitigate these risks and maximise its lifetime surplus for the Exchequer.

The Minister for Finance said the €2 billion payment from NAMA will materially reduce the level of borrowing needed to get us through the Covid-19 crisis.  

“The money has been earmarked for spending and will greatly assist the Government in delivering appropriate supports for individuals and businesses impacted by Covid-19 in the coming months,” Paschal Donohoe said. 

“I thank the NAMA Board and staff – in particular its chairman Aidan Williams, his predecessor Frank Daly and its chief executive, Brendan McDonagh – for their efforts in delivering this surplus,” he added.

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EU reopens to outside visitors in bid to save tourism

The European Union has reopened its borders to visitors from 15 countries, but excluded the United States where deaths are rising again and a top health official warned the country was heading in the “wrong direction”.

The final list of nations safe enough to allow residents to enter the EU did not include Russia, Brazil or the US, where the daily death toll passed 1,000 yesterday for the first time since 10 June.

US infectious diseases expert Anthony Fauci said the US could see 100,000 cases a day if the current trend continued, and several US states imposed 14-day quarantines on travellers from other states.

The EU hopes relaxing restrictions on countries from Algeria to Uruguay will breathe life into its tourism sector, which has been choked by a ban on non-essential travel since mid-March.

Travellers from China, where the virus first emerged late last year, will be allowed to enter the bloc only if Beijing reciprocates and opens the door to EU residents.

However, with over 10 million known infections worldwide and more than 500,000 deaths, the pandemic is “not even close to being over”, the World Health Organization has warned.

EU reopening under German leadership

Germany has taken over the European Union’s six-month presidency, with the EU facing its deepest recession since World War II as it continues to deal with the ongoing fallout from the Covid-19 pandemic.

The EU’s largest economy was recently forced to move back on some of its easing of restrictions as localised outbreaks emerged, with the state of North Rhine-Westphalia having to extend a lockdown on a district hit hard by a slaughterhouse cluster.

German Chancellor Angela Merkel called for extraordinary measures to help the 27 member states deal with the coronavirus crisis.

The first major test will come at an EU summit later this month, where Ms Merkel hopes leaders will reach agreement on a €750bn rescue fund.

The proposed fund, announced by Germany and France in May, would be financed through shared EU borrowing and involve a number of grants for those countries hardest hit by the recent crisis.

A number of countries, including Austria and the Netherlands, oppose the deal and are calling for loans to be issued, rather than grants.

If accepted, it would mark a milestone for EU unity.

The German Ambassador to Ireland said the handling of the Covid-19 crisis is the key priority of Germany’s EU presidency.

Speaking on RTÉ’s Morning Ireland, Ambassador Deike Potzel said she hopes compromise will be found in the distribution of the EU’s coronavirus €750bn recovery fund.

Ms Potzel said Germany hopes all member states will share the sentiment that “what is good for Europe is good for us” and get out of the crisis “stronger than we were before”.

Spain and Portugal reopen their shared border

Spain and Portugal have reopened their shared border, which has been closed since 16 March, as Lisbon sought to protect itself from new cases that were exploding across Spain. 

With its only land border closed for more than three months, Portugal has weathered the epidemic better than its neighbour – 1,576 deaths from 42,141 cases compared with Spain’s 28,355 deaths from almost 250,000 cases. 

But both countries are struggling with fresh outbreaks since the lockdown ended.

Lisbon has reimposed a partial lockdown, ordering some 700,000 people in several impoverished neighbourhoods in the north of the capital to stay at home. 

In these areas, residents were never properly able to respect the initial lockdown, many having to work and take public transport, local organisations have said. 

Meanwhile, Spanish regions are closely watching around 50 separate outbreaks, which in most cases are limited to just a handful of people. 

Austria issues travel warnings for Western Balkan countries 

Austria is issuing travel warnings for Western Balkan countries that are not part of the European Union because of an increase in coronavirus infections there, Foreign Minister Alexander Schallenberg and his ministry said this morning.

Mr Schallenberg said the measure applied to six countries.

His ministry said on Twitter those are Albania, Bosnia, Kosovo, Montenegro, North Macedonia and Serbia.

Greece welcomes first tourists

Business owners in Greece, which has suffered fewer than 200 virus deaths, have been nervously awaiting the return of mass tourism, particularly in island resorts.

The country’s economy has been hit hard by lockdowns and travel restrictions – all but ending its lucrative tourism season before it began.

Romanian Cojan Dragos was “the first tourist” in one Corfu hotel, along with his wife and daughter.

“It’s empty, there’s not a single tourist, the restaurants, the shops are closed, it’s sad,” he said, hoping for some excitement when other tourists arrive.

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Spend yesterday approached pre-Covid levels – Revolut

Hairdressers, barbers, spas, chiropractors and dentists were among the big beneficiaries of the Phase 3 reopening of the economy yesterday, according to transaction data from Revolut.

Pubs and restaurants also got a boost from the restart of business, although to a lesser extent than the other big winners.

Excluding online shopping, overall spending yesterday by Revolut’s one million Irish customers across 15 categories was up 52% compared to average daily spending during the lockdown.

It was also almost back at average daily spending levels for the month before the Covid-19 pandemic led to severe restrictions to business activity across the country over three months ago.

Compared to a normal Monday prior to lockdown, the overall spend was up 23%.

Not surprisingly, high demand for personal grooming services resulted in a significant bounce in that sector, with spending by hairdressers and barbers up 72% versus the daily average prior to the arrival of restrictions.

Revolut says the data suggests that prices charged by hair and beauty providers increased only marginally, with customers spending an average of €37.81 in hairdressers and barbers yesterday, compared to an average before lockdown of €36.15.

Spending on spas was also up by nearly half compared to the average spend prior to restrictions being put in place.

But the picture was more mixed in the hospitality sector, with overall spending in pubs still less than half of the pre-lockdown daily average, although higher than an average Monday before the pandemic struck.

The requirement for customers to buy a meal worth at least €9 helped propel spending, with the average customer handing over €27.64 in the pub last night, compared to just €13.99 on an average night out before Covid-19.

Spending in restaurants though was less strong, coming in at a third of what would have been spent on an average night before the restrictions. 

It was also just over half of what would be spent on a regular Monday night before Covid-19.

Many people also used the lifting of restrictions as an opportunity to attend a dentist or chiropractor, with both services seeing a more than doubling in spend versus the period before the pandemic arrived.

When it comes to taxi use, spending was much lower than it was before the Government introduced restrictions, at around a quarter of average levels prior to restrictions being introduced.

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‘Lenders have responsibility to borrowers’ – BPFI

The chief executive of Banking Payments Federation Ireland has said it is not unreasonable for banks to look closely at applicants coming forward for mortgages and loans. 

Brian Hayes’ comments follow news of AIB’s stricter lending guidelines as a result of the impact of Covid-19. 

Mr Hayes said that lenders have a responsibility to borrowers. 

He said there is not a blanket ban across the industry and the different lenders make individual decisions.  

Brian Hayes said, in the interests of borrowers, banks have to look beyond the short term immediate situation of Covid-19 and ask if the applicant will be able to repay a long term loan.

4,000 mortgages have been drawn down in the last two months, he noted. 

Mr Hayes also said that banks have made it clear that there must be a regard for a change in circumstances between mortgage approval and drawdown. 

It is also the clear view of the Governor of the Central Bank of Ireland that it is in the interest of the borrower that there must be a full assessment before the mortgage is drawn down.

Mr Hayes said his advice to mortgage applicants is to shop around. 

The Central Bank said yesterday that the decision to grant or refuse an individual application for mortgage credit is a commercial decision to be made by the regulated entity. 

“A loan offer may contain a condition that the lender can withdraw or vary the offer if in the lender’s opinion there is any material change in circumstances prior to drawdown. In such cases, the decision to withdraw or vary the offer is a commercial decision for the lender,” the Central Bank said.

Earlier this month, Central Bank Governor Gabriel Makhlouf said that banks had a role to play in supporting customers during the Covid-19 crisis but that they must do so “in a sustainable way”. 

He also said he expected that banks would be making losses in the coming months and relying on built-up reserves.  

He described the financial system as “resilient” but added that that resilience was “not infinite”.

AIB said yesterday that at a time of unprecedented economic instability triggered by the Covid-19 pandemic, “it considers it prudent to review its mortgage lending policies”.

“It is imperative that the mistakes of the past are not repeated, that customers are not exposed to unnecessary risk and that their loans are sustainable,” the bank added.

Bank of Ireland said today that it continues to process mortgage applications for customers who are on the Covid-19 benefit schemes, provided affordability is not an issue. 

Where income has changed, the bank said it is liaising with customers to understand their updated circumstances and assess if these are expected to change again in the future.  

This process has always been followed where income changes for an applicant, as it would not be responsible to provide somebody with a mortgage at a level that they will struggle to afford, Bank of Ireland added.

Sinn Fein’s Housing spokesman Eoin O’Broin has called for several banks to end a blanket ban they have imposed on mortage applicants who are availing of the Wage Subsidy Scheme. 

Eoin O’Broin said that banks should take a more nuanced approach to this and to do individual assessments and deal with each case on its merits.

He said no one is asking the banks to break legislation regulations or to lend recklessly.

He said he has been contacted by constituents who are still in full time employment, with many receiving the same wage as before as alongside the Wage Subsidy Scheme, their wages are being topped up by their employer. This indicated that their employment is secure, he said.

Mr O’Broin said in some cases where people have had mortgage pre-approval, that pre-approval has been withdrawn. 

He said in two or three cases, people signed contracts and either the contract has been put on pause, or people have been told they can not proceed with the purchase until they had two Post Covid wage slips. 

He said in these cases, people have lost their homes.

People “are already deeply frustrated at the failure of banks to play their part,” he added. 

He also accused the banks of looking after themselves and not looking after the needs of their customers.

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