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Businesses unhappy with Covid plan and seek supports

Business group Ibec has called for an increase in financial supports for business in the worst impacted sectors of the economy. 

In a statement this evening, it said current fixed amount grants are proportionately lower for mid-sized and larger employers that continue to face fixed costs. 

The Licensed Vintners’ Association said it was “disappointed” in today’s revised Living with Covid plan.

It said it was hoping for details about what levels of vaccination or rate of transmissions might facilitate future re-openings in parts of the economy.

It also stated that the extended income and business supports are not sufficient. 

It is seeking a doubling of the Covid Restrictions Support Scheme (CRSS), an extension of the Emploument Wage Subsidy Scheme and the waiver on commercial rates to continue until the end of the year. 

The Vintners’ Federation of Ireland, which represents publicans outside Dublin, said the lack of any detailed plan for how the pub sector will reopen is a major flaw in plan.

It said this will prolong the anxiety and uncertainty for over 7,000 publicans.

Hoteliers also called on the Government to “step up to the mark” to help those who will have to remain closed.

“Government supports to date have been very welcome and have made a difference for hotels and guesthouses,” said Elaina Fitzgerald Kane, President of the Irish Hotels Federation.

“However, these supports are wholly inadequate in the face of an extended lockdown and the prospect that the all-important summer period will be eroded.”

“Additional supports are required urgently to help tourism and hospitality businesses survive until society reopens and the sector can restore the livelihoods of their teams.” 

Also disappointed was the Construction Industry Federation which criticised the Government’s decision to extend its lockdown of parts of the construction sector. 

It claimed HSE monitoring of the industry has consistently shown negligible levels of Covid-19 cases associated with the building work.

The Restaurants’ Association of Ireland, said 150,000 hospitality workers needed “…certainty regarding their jobs and when they can return to work.”

It also expressed “extreme disappointment” in today’s revised plan and said the extension of existing supports “do not go far enough”

It added that it was “unacceptable” that no information was given on the metrics to determine reopening dates for restaurants and hospitality. 

Chambers Ireland criticised the three month extension of the Government supports for business, claiming it is not long enough.

“The extension of existing financial supports is good news, as it reduces some of the uncertainty for businesses,” said Ian Talbot, chief executive of Chambers Ireland.

“Yet, right across our Network, there is the very real concern that Government is still failing to engage with the reality of the situation facing our local economies.”

He added that wage supports, commercial rates waivers and debt warehousing will be needed for most of 2021. 

“While the announcements this evening are welcome, the business community fears we will be back in this position again in a few short months, seeking clarity on further extensions,” he claimed.

He said many business owners are losing faith in the Government response and this could lead to an eroding of the adherence to the public health protocols.

However, Retail Ireland welcomed the extension of business supports until the end of June.

But it warned that the ongoing Level 5 restrictions will inevitably put vulnerable businesses at risk.
“It is vital that the full range of business supports are kept in place for as long as needed,” said Arnold Dillon, Retail Ireland director.

“Even when restrictions are eased, it will take a long time for many retailers to recover.”

– additional reporting Will Goodbody

Article Source – Businesses unhappy with Covid plan and seek supports – RTE – Robert Shortt

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Govt extends key economic supports as restrictions continue

The Government has said that measures to support business, jobs and employment are to remain in place until the end of June.

It follows the announcement that Covid level 5 restrictions are to remain in place across a number of sectors for weeks and in some cases months.

The measures include the Employment Wage Subsidy Scheme (EWSS), Covid Restrictions Support Scheme (CRSS) and Pandemic Unemployment Payment (PUP), all of which were due to expire on March 31.

The Covid enhanced illness benefit, which was also due to expire on the same date, has also been extended to June 30.

The Government also said it would conduct an economic assessment of the CRSS around its impact, design and sustainability of the support.

The commercial rates waiver is also to be extended for a further three months for those businesses most seriously affected by the restrictions.

The suspension of redundancy provisions, which was due to expire on March 31, has also been extended to June 30, in order to help avoid further permanent job losses, the Government said.

Other state supports, such as loans, grants, vouchers and schemes for business affected by the pandemic are to remain open and under review.

Meanwhile, it has emerged that the cost of the PUP and the EWSS is currently running at €200m a week. 

In a statement to RTÉ News, the Department of Public Expenditure and Reform said almost €1.1bn has been spent on the PUP this year to date, compared to a Budget allocation of €600m. 

Up to last week, €600m has been spent on the EWSS out of a Budget day allocation of €1.1bn. 

This means that to date, the combined expenditure on both schemes is €1.7bn out of a combined allocation of €1.8bn. 

The statement goes on to say that “…as we move forward through March and quarter two, additional expenditure will need to be met by reallocating from the Contingency Funds.” 

The Contingency Funds include just over €2bn for a Covid 19 Contingency Reserve and €3.4bn earmarked for an economic Recovery Fund. 

The statement says “…the extent of the demand on these funds in quarter two will depend on the situation with the virus and the restrictions in place.”

– additional reporting Robert Shortt

Article Source – Govt extends key economic supports as restrictions continue – RTE – Will Goodbody

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Judicial reviews delay Strategic Housing Development

A new report has found that the number of units in planned Strategic Housing Developments (SHD) in Dublin that have been delayed or cancelled as a result of judicial reviews has risen tenfold in the last year.

Last year 5,802 potential new apartments and houses were impacted by legal challenges to SHDs, compared to just 508 a year earlier. 

The annual construction sector report by consultants Mitchell McDermott, also found that judicial reviews involving SHDs nationally had risen seven-fold, from 1,048 units in 2019 to 6,969 last year. 

SHDs involve a faster than normal planning process and can only be used for developments of 100 apartments or houses or more than 200 student beds.

“The SHD process was designed to fast track the planning process for residential units in order to alleviate the current housing supply crisis,” said Paul Mitchell, co-author of the report.

“Last year 30% of units were stalled due to the judicial process, compared to 4% in 2019.”

“The country’s annual residential output is 20,000 units, so that puts that figure in context and shows the disproportionate effect these reviews are having on potential developments.”

Mr Mitchell added that it would be better if in circumstances where planning permission is quashed due to relatively minor administrative issues, the applicant does not have to restart the process again as is currently the case.

He also highlighted that there are no plans yet to put in place new arrangements when the current SHD process ends this time next year.

“This could lead to further bottlenecks in the planning system next year,” he said.

He added that any re-examination of the scheme should consider the threshold for taking a judicial review, which he claimed is currently quite low.

The report also found that while cost inflation in the construction sector is predicted to rise by between 2.5% and 3% this year, it could end up being higher as a result of Covid-19 and Brexit.

“With regard to costs, there is a lot of noise in the market at the moment about potential increases in building materials,” Mr Mitchell said.

“Brexit and Covid have disrupted supply lines and as a result a range of building materials such as timber, insulation, ironmongery, plasterboard etc are predicted to rise by between 5 to 16%.”

“The pandemic has also led to a massive 300% hike in shipping costs from Asia to Europe, adding further to cost uncertainty.”

The report also highlights that more than €7bn worth of new data centres are planned for Ireland over the next five years.

This is because of the volume of tech companies operating here as well as highly competitive pricing.

But proposed new developments of office and student accommodation are expected to slow down, Mitchell McDermott found, with some office schemes being redesigned to take account of anticipated new post-pandemic flexible ways of working.

Despite most hotels currently being closed to all but frontline workers, the study also found that there will be 4,177 new hotel beds coming on stream in Dublin this year, a 17% increase.

However, it also claims that most new schemes have been put on ice pending the end of the pandemic.  

Article Source – Judicial reviews delay Strategic Housing Development – RTE – Will Goodbody

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Central Bank mortgage lending rules keeping house inflation down – ESRI

New research by the ESRI has found further evidence that mortgage lending rules put in place by the Central Bank six years ago are helping to keep house price inflation down. 

The study by author Kieran McQuinn found that there remains a strong mutually reinforcing relationship between the availability of mortgage credit and house prices here. 

He also found that movements in one of those variables is likely to lead to movements in the other. 

When Mr McQuinn ran simulations, he found that after 2018 the average amounts loaned out for mortgages were less than what they should have been based on his models. 

This, he suggests, are the resulting impacts of the imposition of the mortgage lending rules by the Central Bank in 2015. 

“The results of the analysis highlight the continued strong relationship between mortgage credit and house prices in the Irish market and the effectiveness of the macroprudential regulations in limiting the increase in average loan sizes,” he said. 

The knock-on effect of this is a reduction on the upward pressure on house prices, Mr McQuinn said. 

The research builds on earlier research by Mr McQuinn and Trevor Fitzpatrick in 2007 that found a long-term mutually reinforcing relationship between the availability of credit and house prices in the Irish market.

That paper looked at the period between 1981 and 1999, but the current research extends the analysis up to 2020, taking in the credit-fuelled property boom. 

Mr McQuinn said the findings that the model remains reliable over the longer period are somewhat surprising, 

This is because the period between 2000 to 2020 saw significant changes in the Irish housing and credit markets, with one of the largest house price and mortgage credit spirals observed amongst OECD countries, which was followed by a property crash. 

The Central Bank rules were introduced in 2015 to try to increase the resilience of the banking and household sectors to the property market and to try and reduce the risk of bank credit and housing price spirals from emerging in future. 

They put a limit on how much a borrower can receive from a bank to fund a residential property purchase based on loan to value and loan to income limits. 

Article Source – Central Bank mortgage lending rules keeping house inflation down – ESRI – RTE – Will Goodbody

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Cautious optimism pushes consumer sentiment higher

Consumer sentiment bounced back in February thanks to cautious optimism about the outlook for the economy, despite the prospect of Covid-19 restrictions lasting for many more months, a survey found today.

The country has been back in lockdown for almost two months and the Government has said any reopening will be very gradual.

The hospitality sector is likely to remain shut until mid-summer as a more infectious Covid-19 variant slows suppression. 

The KBC Bank Ireland’s consumer sentiment index rose to 70.8 in February from 64.9 in January. 

That compares with the 2020 average of 65 and a pandemic low of 42.6 registered during the worst of the first wave of infections in April.

KBC Bank said it was seeing an “up and down” pattern in monthly consumer sentiment readings since June of last year.

It noted that monthly changes in the index only moved successively in the same direction on one occasion during this period. 

“These choppy movements in the index highlight the difficulties Irish consumers face in making sense of their current circumstances and future prospects in rapidly changing health and economic circumstances,” it said.

“The survey period saw a number of very positive forecasts for the Irish economy which hint that the lasting economic and financial fallout may be less problematic than initially envisaged,” KBC Ireland’s chief economist Austin Hughes said. 

“In a similar vein, recent data showing resilience in property prices and a sharp pick-up in new building and house purchases of late may have provided some comfort that this crisis was not following a familiar and frightening playbook,” he said. 

However Mr Hughes noted that in additional questions posed in the February survey, 51% said the pandemic had negatively hit their financial circumstances and 30% of all respondents thought the negative impacts would last for one to two years. 

He said those results might caution against expectations of an unprecedented consumer boom later in 2021 as record savings were unwound and were “a forceful argument” in favour of the persistence of supportive fiscal policy. 

“These responses hint that for the Irish economy the problem of permanent ‘scarring’ from the crisis seems set to be a more important issue than the possibility of pent-up demand boosting spending,” the economist said.

Article Source – Cautious optimism pushes consumer sentiment higher – RTE

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Too early to predict Ulster loan book sale success – Donohoe

Minister for Finance Paschal Donohoe has said it is too early to say if the negotiations between Permanent TSB and NatWest turn out to be successful on the possible purchase of a loan book. 

It follows the announcement of the phased withdrawal of Ulster Bank from the Republic of Ireland last Friday.

While Mr Donohoe hopes that will be the case, he said there are many stages yet to complete for Permanent TSB to become a so called third force of Irish banking. 

He said it is a huge project and negotiations are in the early stages. 

“As to whether the Irish state and taxpayer will be required to fund that in anyway the first questions will be whether the negotiations turn out to be successful,” Mr Donohoe said.

He said if and when Permanent TSB conclude discussions and come back with a recommendation, he will be able to form his view and go back to Government.

“The journey to a third force in Irish banking is a long journey ahead. It is possible that we could see emerging from what happened on Friday a stronger Irish bank or a number of Irish banks that could be stronger.”

Article Source – Too early to predict Ulster loan book sale success – Donohoe – RTE

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The third banking force awakens

For well over a decade, we’ve been hearing talk on and off about the need for a third banking force in Ireland.

The notion gained legs in the wake of the banking crash, when Ireland was left with two dominant banks in AIB and Bank of Ireland and a multitude of less significant players, like Ulster Bank, Permanent TSB, KBC Bank Ireland and some of the other foreign brands.

The theory went that in order to create a truly competitive banking landscape, some of those smaller banks should coalesce to build a third pillar.

Collectively, that new pillar would be more than capable of taking on the dominance of the big guys.

But for a variety of reasons, it never gathered steam.

There was the potential cost of bringing lenders together which would inevitably have required an injection of fresh capital.

Politically, it also never grew legs.

And among the banks themselves, the idea of working together rather than against one another did not prove enticing enough.

But could that third banking force be awakening again?

The exit of Ulster Bank from the market here creates a unique, almost compelling opportunity, for the idea to be revisited.

On paper at least, it makes perfect sense for the sector.

Take some of the loans, the deposits, the accounts and the branches that Ulster Bank no longer wants and mash them into Permanent TSB.

That would create a force, or at least the seed of a force, that could grow and take on the big guys.

For Permanent TSB, which has struggled for years under the legacy of the crash, it would give it much yearned for scale overnight.

According to well placed sources, if the talks that are already under way between the two institutions reach fruition, PTSB could end up snaffling the bulk of Ulster Bank’s €14bn mortgage book.

This includes around €7bn in unattractive low-margin tracker mortgages, but this might be something PTSB would have to swallow to make the deal work.

Also part of the transaction could be €700m in SME loans that Ulster Bank currently holds.

These would fit nicely with PTSB’s stated strategy of growing that part of its business.

It might also have to take on retail operations of Ulster Bank, including some branches.

With 76 of its own, it certainly wouldn’t want 88 more.

But synergies could be found in some areas, and in other parts of the country where PTSB doesn’t have a presence but Ulster Bank does, it could help fill in gaps.

PTSB might also have to accept some of the €22bn in deposits currently held by Ulster Bank, even though it might not want them because of the current cost of holding cash in a negative rates environment.

In the end, what you’d end up with is a PTSB that would be twice as big as it currently is, a prospect PTSB’s relatively new and ambitious CEO, Eamonn Crowley, would relish.

To pull it off, though, the bank would have to receive additional funding, and here is where the problems might arise.

Permanent TSB is still 75% owned by the State, but it doesn’t have as strong a capital position as AIB, which is also majority owned by the Government.

Would the Government risk the public relations nightmare that would accompany a further State injection of cash in yet another bank? And at a time when the State is borrowing billions just to keep the economy afloat through the Covid-19 crisis.

Cue the comparisons to the depths of the financial crash, when bailing out the banking sector cost the State €64bn.

But the flipside is, if faced with the prospect, could we afford not to do it?

Failure to re-engineer a banking sector post-Ulster Bank that is truly competitive could prove hugely damaging for consumers, businesses and the economy as a whole, with the real prospect of constrained credit, higher borrowing rates and even negative deposit rates.

Asked about the issue yesterday, the Minister for Finance kicked to touch, saying it would first be up to to PTSB to come to him with a proposed transaction it thinks is in its commercial interest before he would have to carefully consider the issue of how to fund it.

It is likely that getting to that point will take some time and a deal may never be concluded.

But if it is, then the Government may have to make some challenging decisions about whether the force is strong enough to take the plunge.

Article Source – The third banking force awakens – RTE – Will Goodbody

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Licensed Vintners’ Association calls for more clarity

The Special Committee on Covid-19 Response will meet later today as the updating of the Government’s plan on Living with Covid continues ahead of its publication this week.

Caution is a key word from Government ahead of the publication of its strategy to deal with this phase of the pandemic.

It is a plan that is likely to set out the stages at which things will happen, but due to the volatility of the virus it will not contain many exact dates.

While the Taoiseach has said that nothing is set in stone, there is a widespread expectation that most of the current restrictions could remain in place until May.

However, there will be a review of the situation in April where small changes could be made.

The Government is also likely to extend the Pandemic Unemployment Payment and supports for businesses until the end of June.

There have been calls from the hospitality sector for more financial assistance given that it faces the prospect of being shut until mid-summer.

The chief executive of the Licensed Vintners’ Association – which represents Dublin pubs – said the Government’s Living through the Pandemic Plan must provide some clarity and hope for pubs.

Many of these pubs have been shut since March 15 last year. 

Donall O’Keeffe said the updated plan must paint out the conditions that must be fulfilled in order to allow the hospitality sector to re-open. Whenever we get to re-open, he said, it must be a sustainable re-opening. 

“There is a sense at this stage in our world that this is never ending. And we do need some clarity, some hope that this sacrifice will pay off and that our businesses will be able to reopen,” he stated. 

Mr O’Keeffe said the sector had anticipated re-opening in May or June but this now seems unlikely.

Poor communications from the Government are adding “ferocious stress” to the 7,000 publican families in the country, their staff and their suppliers, he added. 

He said that political signalling around the future of wet pubs is very negative and there must be an immediate increase in the level of financial support for these businesses. 

Donall O’Keeffe said the Government must re-double payments at a minimum to allow them cover fixed costs and remain in a position to re-open in the future and recover their businesses.  

12 months closed with huge uncertainty about re-opening is a very difficult position to be in, he said. 

Mr O’Keeffe said he would welcome any extension to trading hours and there is a huge consumer demand for late trading at the weekends while tourists also “look for a late scene” and that 5am seven nights a week to the sector should be available – under strict conditions. 

He added that while things are currently “appallingly bad” for wet pubs, they are even even worse for late bars and nightclubs.

But he said they will re-open, and when they do, later trading will be of great benefit to the whole industry.

Article Source – Licensed Vintners’ Association calls for more clarity – RTE

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Consumer prices down 0.2% in January – CSO

New figures from the Central Statistics Office figures show that consumer prices posted an annual fall of 0.2% in January compared to a drop of 1% a month earlier.

This marked the slowest rate of year-on-year decline in nine months. 

On a monthly basis, the CSO said that consumer prices rose by 0.1% in January from December. 

Consumer prices have dropped on an annual basis since Covid-19 restrictions were first introduced in March but they have been rising on a monthly basis since November. 

Today’s CSO figures show that transport costs decreased by 2.3% due to lower prices for diesel and petrol and a reduction in air fares.

But this decrease was partially offset by higher prices for cars and an increase in the cost of services of personal transport equipment.

Clothing and footwear costs were down 3.4% due to sales, while good and non-alcoholic beverage prices fell due to lower prices across a range of products such as meat, jam, honey, chocolate and confectionery, vegetables and fruit.

January also saw lower prices for home heating oil, lower rents and a fall in the cost of natural gas. These reductions were partially offset by an increase in the cost of electricity and higher mortgage interest repayments, the CSO said.

The CSO noted that health costs increased last month, mainly as a result of a rise in the cost of medical and dental services. 

Prices for alcohol and tobacco also rose mainly due to an increase in the cost of tobacco products and higher prices for spirits and wine sold in supermarkets and off licences.

Article Source – Consumer prices down 0.2% in January – CSO – RTE

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Varadkar promises more targeted Covid-19 supports

The economy will “bounce back” sooner than many people think, the Tánaiste has told the Dáil, but he added that the pandemic will leave “many scars” including lost jobs and livelihoods as well as lost lives. 

The Minister for Enterprise, Trade and Employment said new financial supports will be put in place in the second half of the year for businesses hit hardest by the pandemic. 

Leo Varadkar said the Government “will extend in quarter two the vital financial supports in place for businesses including Covid-19 Restrictions Support Scheme (CRSS), the wage subsidy scheme and the Pandemic Unemployment Payment (PUP).”

He added that the Government “will also provide more targeted financial support beyond quarter two for sectors that have been particularly wounded by this pandemic, such as aviation, tourism hospitality the arts and entertainment.” 

“We will bounce back – possibly sooner and quicker than some people think. But I am not naïve enough to think that things will go back to normal, nor should they, some things will change forever,” Mr Varadkar said.

“The pandemic will leave scars – economic and social, lost families and friends, lost jobs and lost livelihoods. Our challenge is to rebuild the economy not to return to the old normal but to build a better new normal when the pandemic is over,” he stated. 

He also told the Dáil that the pandemic has accelerated many of the deep structural shifts that were already underway in the economy. 

The sudden shift online poses serious problems for the retail industry, he said – and the pandemic has widened the digital divide. 

“While many workers in well paid jobs moved seamlessly to online jobs, many customer-facing workers in more vulnerable sectors simply couldn’t move online. At primary, secondary and third level students from less well-off backgrounds and in rural areas faced similar challenges,” he said.  

Remote working will be part of the world of work after the pandemic, the Tanaiste predicted. 

As part of that, next month the Government will be signing a legally admissible code of practice on the right to disconnect.

Later in the year there will be legislation to give employees the right to request remote working, he said.

Meanwhile, interest rates on mortgages and business loans in this country are higher than elsewhere because of high levels of non-payment, the Tánaiste said today. 

Responding to questions from Labour’s Aodhán Ó Ríordáin, Mr Varadkar said the average interest rates on mortgages and loans in this country, while falling in recent times, is “too high and higher than the EU average.”

He said like for like comparisons can be misleading, because other countries have higher bank charges or other costs. 

“One of the reasons we have higher interest rates in this country is historically very high levels of non-payment,” he said. 

“When people don’t pay their debts – whether it is individuals or businesses – that has a social consequences. It means it is harder for others to get credit and those who do face higher interest rates,” he stated. 

He said some TDs “try to ride both horses” by saying it is ok for people not to pay debts while at the same time complaining about high interest rates. 

Article Source – Varadkar promises more targeted Covid-19 supports – RTE – Mary Regan

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