Business News

Household debt continues to decline but still fifth highest in EU

New figures from the Central Bank reveal that while household debt continues to decline here, it remains the fifth highest in the EU.

The Central Bank’s Household Credit Market Report for 2019 said that household debt stood at €136.9 billion, or €28,186 per person, in the first quarter of 2019.

This compares with a level of household debt of €140.2 billion the same time last year, or  €28,869 per person.

The country’s debt burden has been reduced by €43 billion over the last ten years.

Today’s Household Credit Market Report, which provides a “deep-dive” into the overall household credit market, also shows that the value of new mortgage lending in the second quarter of this year stood at €2.25 billion. 

It noted that first-time-buyers accounted for almost half of new mortgage lending and refinanced mortgages for about 14%. 

40% of first-time-buyers this year had a loan term greater than 30 years, while the share of new lending for borrowers aged 30 and under has declined from a just under a third in 2006 to 14%.

The Central Bank also noted that on average, first-time-buyers in Dublin spend a quarter of their net monthly income on mortgage repayments while outside of Dublin they spend a fifth.

Meanwhile, the share of new mortgages with fixed rates for five years or more increased from 15% in 2017 to 33% in the first half of this year, the Central Bank said. 

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Tax deadline looms for self-assessed taxpayers

The tax deadline for self-assessed taxpayers is at the end of the month. 

It is that time of the year for self-employed and other self-assessed taxpayers to get their affairs in order before the October 31 filing deadline. 

Unlike Brexit, it is a firm deadline, unless you are filing online in which case the deadline is November 12.

There are three steps that self-assessed taxpayers should take to kick-start the pay-and-file process:

  • Consider all your sources of income. If you have income that was not subject to PAYE or DIRT, it is likely you will need to declare it via your tax return. You should contact Revenue to see whether you need to register as self-assessed.
  • Consider what deductions may be available and check if you are claiming all your allowable expenses and deductions.
  • Check whether there are any other reliefs or credits, such as for medical expenses, flat-rate expenses, or college or training fees.

Joanna Murphy, CEO of, said the number of people filing a self-assessed tax return has grown by 112,000 people in the last five years alone.

“While maintaining an efficient tax regime can be challenging for any business, we find this is particularly the case for new business owners and traders that may lack experience in managing their own tax and filing a self-assessed return,” she said.

The tax experts believe that the growth in recent years in the number of self-assessed taxpayers is down to several contributing factors.

“These days there are more and more ways for people to diversify their income,” Ms Murphy said.

“Ireland’s ‘sharing economy’ has exploded in recent years through activities such as Airbnb, which has become a significant income generator for a growing number of people, some of whom have made a full-time business from hosting via the platform. In addition, Instagram has facilitated the development of whole new entrepreneurial sectors and new income streams for ‘influencers’ who can earn an income promoting products and services online for big brands,” she explained.

Another significant contributing factor to the growth in the numbers of new registrations could well be the stringent enforcement of tax-compliance by Revenue, who are now tougher than ever in their collection of tax.

As a result there is much greater awareness of tax compliance among the public, and the focused clampdown of Revenue on non-compliance throughout the country has had significant impact in recent years.

Ms Murphy said, “If people do find themselves with additional income, perhaps outside of their PAYE employment, they are required to file a tax return. If you have earned more than €5,000 net untaxed a year, you will need to register as a self-assessed individual with Revenue by completing a TR 1 form (you will only need to do this once). You’ll then need to file a Form 11 tax return and make a tax payment by October 31 each year for the previous year’s earnings. 

“If you earned less than net €5,000 in the year you will still need to file a return by submitting a Form 12. Similarly to Form 11, your earnings from the previous year will be relevant when completing a Form 12,” she explained.

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UK to focus on goods flowing as smoothly as possible

UK officials will prioritise the flow of goods into the UK over customs payments and paperwork in the event of a no-deal Brexit. 
That is according to a UK government official, who said it would be possible for hauliers and others moving goods into Britain to complete customs declarations and pay duties afterwards rather than at the port of entry.
“That means that you are prioritising how those goods can move through the port, rather than being able to say it is 100% customs controls at the stroke of midnight and if you don’t have every single piece of paper absolutely 100% you get turned around,” he said.
He said that if the UK left the EU with no deal, then the UK would have flexibility over how customs controls will be applied.

UK officials will prioritise the flow of goods into the UK over customs payments and paperwork in the event of a no-deal Brexit. 
That is according to a UK government official, who said it would be possible for hauliers and others moving goods into Britain to complete customs declarations and pay duties afterwards rather than at the port of entry.
“That means that you are prioritising how those goods can move through the port, rather than being able to say it is 100% customs controls at the stroke of midnight and if you don’t have every single piece of paper absolutely 100% you get turned around,” he said.
He said that if the UK left the EU with no deal, then the UK would have flexibility over how customs controls will be applied.

“What it essentially means is that in that period, if you were to have a no-deal, the focus will be on ensuring goods can continue to flow in as smoothly as possible,” he stated.
There would be a trade-off in terms of the revenue that would be collected from tariffs, he added.
“But that is effectively the trade-off that the UK government has decided – that it is better to take a risk on maybe missing some of the revenue that in theory should be paid, versus actually keeping goods flowing as much as possible,” he said.
The comments will come as a reassurance to Irish exporters who had been concerned about potential delays at UK ports in the immediate aftermath of a no-deal Brexit, even though the threat of that now appears to have receded somewhat.

The President of the Irish Road Haulage Association (IRHA), Verona Murphy, said such an approach would be welcome.

She said the IRHA had made similar suggestions and proposals to the EU through the organisation that represents hauliers at European level.
There had been warnings in the UK of possible shortages of certain foods and other goods there in the event of no-deal if trucks coming from Ireland and continental Europe were held up at ports.
The UK government official was speaking to RTÉ News ahead of an industry day for Irish businesses hosted by the British Embassy in Dublin today.
The event, one of a series that has been held by the British government across member states in preparation for Brexit, involves officials from across a range of UK government departments, as well as Her Majesty’s Revenue and Customs.
The official said there are things businesses need to do in order to get ready for a no-deal and also a deal.
He said that until the ratification of the deal agreed between the EU and UK has gone through, a no-deal could still happen.
As a result he said the UK government is trying to strike a balance between telling businesses what it is that they can do to practically get themselves as ready as possible but for that effort also not to be wasted if the deal is passed into law.

Business preparations should include registering for an EORI number with Revenue in order to move goods between the UK and EU, ensuring awareness of Irish customs processes and speaking to UK suppliers and customers to check who will be responsible for customs processes, the embassy said.
On the question of how businesses will prove that goods coming into Northern Ireland will stay there, if the deal is ratified, the official said a huge amount of work has already been done in this area.
He said that because Northern Ireland will be aligned with the single market, goods that are coming into it from Britain will have to also be aligned.

As a result, single market and customs checks on goods arriving into Northern Ireland will be done at ports.
But he said the exact process of how goods moving on to the Republic from the North would be dealt with would be considered by the joint committee during the transition period.

The aim would be to ensure any new processes are as minimal as possible for Northern Ireland businesses, he said.

In a deal scenario, the vast majority of trucks crossing the Irish Sea should be able to go through the customs process while on the water using technology, he said, meaning there would be no major delays at ports.

Only occasionally would a truck get pulled over, he added, for security or random checks or if there is a question mark raised by the customs paperwork.
However, Irish hauliers using the UK solely as a land bridge would not get fast-tracked, he said.
But using the provisions of the Common Transit Convention goods would be able to transit the UK and the customs procedures would be handled at the end of the destination, he said.
This would apply in both a deal or no-deal scenario, he claimed. 

To help hauliers and traders in the EU further, the UK is setting up 50 information pop-up sites in EU locations for drivers to provide advice on the documentation required.

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High ranking in global pensions index masks underlying sustainability issues

High ranking in global pensions index masks underlying sustainability issues

Ireland has the 11th best pensions system in the world, according to the 2019 Melbourne Mercer Global Pensions Index.

The index placed Ireland ahead of countries such as Germany, the UK, France, Spain and Austria. However, the high ranking masks underlying concerns about sustainability.

With the ratio of workers to pensioners set to fall from 5:1 today to 2:1 by 2050, there will be less workers to fund the state pension in the future.

“Ireland ranked very high in terms of adequacy, that’s the level of income in retirement and that’s heavily influenced by the state pension which is comparatively generous by international standards,” said Caitriona MacGuinness, DC and Master Trust Leader at Mercer in Ireland.

“However, we have a low score on what we call sustainability. We were 27th out of 37. Sustainability really focuses on the likelihood that the current system will continue to be able to provide benefits.”

The Government plans to introduce auto-enrolment in 2022, and it has the potential to substantially improve pension provision in Ireland.

“It won’t fully solve the problem, there will be issues with sustainability of the state pension but it is likely to be a game changer. At the moment outside of the state employees, only one in every two people working in the private sector have pension savings outside the state pension,” Ms MacGuinness said.

The state pension has to be paid by the state so reduced government debt would be positive also, she said.

Pension provision has fundamentally changed in the UK since the introduction of auto-enrolment in 2012. It is hard for some facing retirement in 20, 30 or 40 years to start saving for their retirement, but when people are signed up for a pension automatically, they tend not leave the scheme.

The index compares 37 retirement systems across the globe and covers almost two-thirds of the world’s population. It highlights the broad spectrum and diversity of the world’s pension systems, demonstrating even the world’s best systems have shortcomings.

The Netherlands is ranked number one in the global pension index.

“They have a generous state pension but they also have that element of encouraging people in the private sector to save for retirement without a type of compulsory system for private pension saving,” Ms MacGuinness said.

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Cautious welcome to Brexit deal from business groups north and south of border

Cautious welcome to Brexit deal from business groups north and south of border

Business group Ibec said it was encouraged by the agreement between the EU and UK on a new Brexit Withdrawal Agreement.

However, in a letter to members, Ibec CEO Danny McCoy said there had to be an awareness that the deal, if ratified, would complicate trade relations with the UK.

Ibec said the deal had a lot to commend it, not least relative to the catastrophic implications of a ‘no-deal.’

“If ratified, it would provide the basis for an orderly UK exit that avoids a damaging no-deal cliff edge at the end of the month,” Mr McCoy wrote.

“It includes far-reaching and vital provisions to avoid a hard border on the island of Ireland, protects the Common Travel Area, provides a status quo transition period and allows talks to move on to the future EU-UK relationship.”

However, he said, Brexit was always an exercise in damage limitation and that the country would inevitably end up in a worse place than we are now.

“The deal means Northern Ireland will be subject to preferential, but potentially complex, new customs arrangements. Meanwhile, the political declaration on the future EU-UK relationship is far less ambitious than Theresa May’s previous deal. This could have significant negative economic implications in due course. We have also been left burdened with short, overly optimistic timelines to agree a future trade deal, which do not reflect business realities.”

Meanwhile, the Irish Congress of Trade Unions said it was analysing the detail of yesterday’s proposals and their implications.

The ICTU said it had supported – albeit reluctantly – the previous withdrawal agreement as it did less harm to the island of Ireland.

It said it greatly regrets any form of Brexit.

“It seems on our initial assessment that this text is a slightly lesser version of the original withdrawal agreement with a new mechanism to replace the NI backstop, but that essentially will do what a backstop was intended to do, albeit with some democratic oversight from the Assembly,” the ICTU said in a statement.

IFA President Joe Healy also gave a cautious welcome to the Brexit deal concluded in Brussels yesterday, however the real test is the vote in the UK Parliament in Westminster on Saturday.

If it is ratified, the agreement will avoid a “no deal” outcome, which would have had severe and immediate consequences for the Irish economy, and the agri sector in particular.

“On the limited formation available, the deal appears to address the very deep concerns about creating a hard border on the island of Ireland. For these reasons, we would hope that this deal will be approved by the UK Parliament,” Mr Healy said.

Meanwhile, Tina McKenzie, Chairperson of the Federation of Small Businesses Northern Ireland, has said this Brexit deal is a “real win” for businesses in Northern Ireland.

She said one aspect that is being welcomed by the Federation is that goods can be supplied to the Republic of Ireland without incurring any tariffs.

She said this arrangement agreed by the UK and the EU will result in extra costs with bureaucracy, but added that “businesses are pragmatic and solutions driven and used to working across borders, and figuring that out”.

Ms McKenzie said the changes for its members is that any goods coming in from Great Britain will have to be checked at Northern Ireland ports and anything that is going to Europe will probably incur some sort of a tariff.

She said with regard to tracking customs moves from Britain into the Republic of Ireland and into the EU that travel via Northern Ireland, there will be a system that will have to be adhered to.

She also said businesses will be encouraged to come to Northern Ireland and invest in it, as she said they will be selling that they have “perfect access to the EU and Great Britain”.

She said any Brexit is going to cause change but a no deal Brexit would put some members out of businesses and result in thousands of job losses.

Ann McGregor, chief executive of Northern Ireland Chamber of Commerce and Industry, said the business community in Northern Ireland has always been clear that a deal in the Brexit negotiations is critical.

Ms McGregor said the absolute priority for businesses and the economy is still to avoid a messy and disorderly exit from the EU at the end of October.

She said that businesses need a chance to analyse precisely what the terms of this agreement would mean for all aspects of their operations.

“Many will reserve judgement until they have had time to digest the detail and implications for trade, business growth, export and private sector employment,” she added.

Small and medium sized business representative organisation ISME has also given a cautious welcome to the deal.

But it said it comes at a considerable cost.

“The deal strikes a notably harder Brexit than that proposed by Theresa May, in that the UK will leave the EU customs union,” it said in a statement.

It also warned that even if the agreement is passed by MPs in Westminster, that would only represent the end of the first phase.

“It is simply the withdrawal phase,” ISME said.

“The future arrangements will be far harder to negotiate, since the UK will be looking over its shoulder to trade deals with the US, China, India, Mercosur, and others.”

“And whether those negotiations can be concluded in 14 months is a moot point. The Transition phase represents a stand-still period until the end of 2020, when the real work will be done on what the future (and final) tariff arrangements between the UK and EU.”

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Retail suffers September slump amid uncertainty

Retail suffers September slump amid uncertainty

Retailers have had their worst month since July 2013, according to research carried out among members of lobby group Retail Excellence Ireland.

The Grant Thornton Retail Excellence productivity review for quarter three shows that sales were up by just over 1pc in July and August, but down 3.34pc in September, leaving the quarter down 0.63pc.

David Fitzsimons, group chief executive of Retail Excellence, said: “Almost all sectors across the retail industry contracted during the month, with the worst performers being footwear (-13.08pc) and menswear (-11.02pc). The aggressive declines in the footwear sector were the worst recorded since November 2009.”

He said Brexit and general political uncertainty are negatively affecting consumer sentiment and spending.

Growth in online sales fell steadily over the quarter, with these sales up 12.17pc in July, 8.13pc during August and just 4.17pc in September.

“The fact that the rate of growth in online sales has steadily declined across the year to date proves how distressed the situation is,” said Fitzsimons.

Giftware, ladies’ fashion and children’s wear all suffered last month, according to the report, which is based on research from 4,500 stores.

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91% of households now have internet access

91% of households now have internet access

New Central Statistics Office figures show that 91% of households have internet access in 2019, a rise of two percentage points since 2018.

The CSO’s latest Information Society Statistics also reveal that fixed broadband is the most common type of household internet access at 84%, compared with 47% using mobile broadband.

The statistics also show that 79% of internet users are daily internet users, and of this cohort, 58% use the internet several times a day.

It noted that 5% of 16-25 year olds use the internet “all the time”.

Finding information on goods and services and email are the most common internet activities, carried out by 84% of internet users, the CSO said.

The next most common activities are instant messaging at 75% and reading or downloading online news sites, newspapers and or magazines and internet banking.

The CSO noted that clothes and sports goods are the most common type of goods or service bought online, purchased by over half of internet users at 51%, followed by holiday accommodation at 47% and other travel arrangements at 45%.

Meanwhile, the figures also show that 12% of internet users are now using home smart technology – this is where people use the internet to interact with household equipment or appliances, including heating, lighting, and security systems.

On security, the CSO said that receiving fraudulent messages – or phishing – was experienced by 15% of internet users, while online identity theft was reported by 2% of internet users.

9% of those surveyed also found that their children had accessed inappropriate websites.

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China’s growth slows to weakest level in 27 years

China’s growth slows to weakest level in 27 years

China’s economy expanded at its slowest rate in nearly three decades in the third quarter, hit by cooling domestic demand and a protracted US trade war, data showed today.

Chinese gross domestic product expanded 6% in the three months from July to September, down from 6.2% in the second quarter, according to the National Bureau of Statistics (NBS).

The reading – in line with an AFP survey of 13 analysts – is the worst quarterly figure since 1992 but within the government’s target range of 6-6.5% for the whole year.

China’s economy grew by 6.6% in 2018.

“The national economy maintained overall stability in the first three quarters,” said NBS spokesman Mao Shengyong.

“However, we must be aware that given the complicated and severe economic conditions both at home and abroad, the slowing global economic growth, and increasing external instabilities and uncertainties, the economy is under mounting downward pressure,” he said.

Services and high-tech manufacturing were the key areas of growth, while employment was “generally stable”, he added.

Beijing has stepped up support for the economy with major tax and rate cuts and has scrapped foreign investment restrictions in its stock market.

Earlier this week the central bank said it was pumping 200 billion yuan ($28 billion) into the financial system through its medium-term lending facility to banks, which is designed to maintain liquidity.

But the efforts have not been enough to offset the blow from softening demand at home.

The trade conflict and weak domestic demand prompted the International Monetary Fund to lower its 2019 growth forecast for China to 6.1% from 6.2% on Tuesday.

The long-running trade war with the US has also chipped away at the Chinese economy.

This week, Beijing posted weaker-than-expected import and export figures for September after Washington imposed new tariffs that month.

And there were mixed signals for China’s economy in September.

Industrial output rose 5.8%, from 4.4% in August, led by a surge in demand for solar panels and electric vehicles, according to the NBS.

But fixed-asset investment slid to 5.4% year on-year in the nine months from January to September, from 5.5% in January to August, as the government warned against risky borrowing to build roads and bridges that could artificially pump up GDP in the short run.

China’s army of consumers were slowly starting to open their wallets again, with retail sales edging up 7.8%year-on-year in September, compared with 7.5% in August.

Analysts said that despite a stronger September, pressure on economic activity should intensify in the coming months.

They said they expects infrastructure spending to decline as China tries to rein in toxic debt and added that the recent boom in property development looks set to unwind.

A “phase one” deal announced by US President Donald Trump last Friday after he met China’s top negotiator Liu He in Washington offered a temporary reprieve from further tariff hikes.

NBS spokesman Mao said the mini-deal was “good sign” for global markets.

“We feel that the global economy and global trade are increasingly moving towards reducing protectionism and freedom,” he said.

The deal, however, did not roll back any of the stinging tariffs already imposed on hundreds of billions of dollars in trade between the economic powers, nor did it address another round of import taxes planned for December.

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Activity in construction industry sees first slowdown in 6 years

Activity in construction industry sees first slowdown in 6 years

Activity in the construction sector contracted for the the first time in over six years in September, Ulster Bank’s latest Purchasing Manager’s Index reveals.

The PMI fell to 48.3 in September, a significant drop from 53.7 recorded in August.

Any figure under 50 signals a slowdown in a sector, while a figure over 50 signals growth.

September saw the first contraction in the construction industry since August 2013.

The slowdown was mainly accounted for by a fall in commercial activity, while the housing sector continued to post growth.

Ulster Bank noted that the housing PMI reading of 52.9 was still “comfortably” above the expansion threshold of 50.

It added that housing remained the strongest sub-sector for a ninth month in a row, though the pace of residential activity growth did ease to a four and a half year low in September.

Civil engineering firms posted their 13th consecutive monthly fall in activity, while commercial building decreased for the first time since July 2013, and at a solid pace.

Ulster Bank said that new business growth declined to its slowest pace in over six years as Brexit weighed on customer demand.

It also said the the Future Activity Index remained near August’s nine-year low with concerns about Brexit impacts the key factor affecting sentiment regarding the sector’s prospects for the incoming year.

As well as a smaller rise in new business, employment growth in the construction industry eased to an almost six-year low during September with firms expressing a reluctance to take on additional staff as a result of lower activity levels.

“Recent manufacturing and services PMI survey results have been signalling a deterioration in activity trends in some key areas of the Irish economy in recent months, largely reflecting the combination of weaker
global growth and growing risk of a no-deal Brexit,” commented Simon Barry, chief economist at Ulster Bank.

“The September results of the construction equivalent are suggesting that softer trends in the internationally-traded sectors of the economy are showing signs of spilling over into construction activity,” he added.

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Dublin market heading for big gain on Brexit hopes

Dublin market heading for big gain on Brexit hopes

Dublin’s ISEQ index is on track for its biggest one-day percentage gain this year, soaring more than 230 points (3.7%) this evening, boosted by optimism that a Brexit deal can be reached.

After holding talks yesterday in the UK, Taoiseach Leo Varadkar and British Prime Minister Boris Johnson said they saw “a pathway to a possible deal”.

EU negotiator Michel Barnier and his British counterpart Stephen Barclay, meanwhile, held a “constructive” meeting today, both the British and EU sides said.

Shares in the banks jumped in Dublin this evening with AIB surging more than 13%, while Bank of Ireland was up over 11% and Permanent TSB gained 7%.

Other shares recording strong gains included ICG, Ryanair, Cairn Home sand Dalata Hotel Group.

Irish government bonds also rallied today, outperforming their euro zone peers on hopes that a Brexit deal was in sight.

European markets were also higher this evening, with the Frankfurt DAX jumping 2.3%, while the Paris CAC had gained 1.7% and the London FTSE index was up 0.84%.

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