Signs of easing in pace of economic recovery – Davy
The pace of recovery from the economic slowdown brought about by the pandemic restrictions has eased in recent weeks, according to an analysis by Davy. In a research note, chief economist Conall Mac Coille cites real-time data, which showed economic activity recovering sharply early this month after phase 3 of the Government’s re-opening plan began on June 30. However, the latest data suggest that the pace has eased. “Daily personal debit and credit spending averaged €196 million in the week to July 21, down from €199 million on July 14. Apple/Mobility data on driving and workplace activity paint a similar picture of a more gradual improvement,” he said. Davy’s analysis also concludes that the recovery in the labour market is ahead of earlier forecasts with the unemployment rate now standing at 15.7% – down from a peak of 28% in April. However, what it refers to as the ‘easy jobs gains’ since the beginning of phase 3 were now showing signs of dissipating. Activity in the housing market has continued to accelerate, in contrast to other sectors, the report concludes. Article Source: click here.
Borrowers on payment breaks will pay up to €4,500 extra on mortgages
Borrowers who have availed of a payment break on their home loan during the Covid-19 crisis can expect to pay up to €4,500 in additional costs on their mortgages, an Oireachtas committee has been told. This emerges from correspondence this month from four of the main retail banks – AIB, Bank of Ireland, Permanent TSB and Ulster Bank – to the Oireachtas Special Committee on Covid-19 Response. In a letter dated July 21st, Ulster Bank told the committee that a borrower with a balance of €250,000, an interest rate of 2.5 per cent and 30 years left on their mortgage would pay an additional €4,468 by extending the term of their loan by the maximum six months allowed. This reduces to € 2,502 if the borrower pays off the balance over the normal term of the loan. Credit rating Ulster Bank has agreed 12,000 mortgage payment breaks since March. “A payment break allows for monthly repayments of capital and interest to be temporarily deferred/suspended for an agreed period of time (initially up to three months) without any negative impact on the borrower’s credit rating,” Ulster Bank chief executive Jane Howard said. Article Source: click here.
Retail sales rebound by largest amount on record in June
Retail sales rebounded by the largest amount on record in June as many of the Covid-19 related lockdown restrictions were lifted by Government, data from the Central Statistics Office shows. The volume of retail sales jumped 38.4 per cent in the month compared to May on a seasonally adjusted basis. That followed a 32.5 per cent rise in May. On an annual basis, volumes were 3.5 per cent higher. On June 8th, all remaining retail sectors were permitted to open their doors to consumers. Among the businesses that benefitted were those in the furniture and lighting sector, where the volume of sales rose almost 297 per cent, clothing, footwear and textiles, where volumes increased 284 per cent, and books, newspapers and stationary, where volumes were up by 252 per cent on the previous month. Bars and department stores While retail sales in June were 3.1 per cent higher than in February, before the crisis began, not every sector has recovered. Sales volume in bars remains down by 80 per cent while department stores have seen the volume of their sales fall 17.3 per cent. A broadly similar picture can be seen compared to June 2019. Article Source: click here.
Almost half of firms deferring payments to manage cash flow – Central Bank
Around four in ten firms surveyed by the Central Bank say they have unpaid invoices. The outstanding amounts equate to about 20% of 2019 revenue, according to the regulator, which may result in increased pressure to cash flow. As many as 42% of firms said they had changed or deferred payments to manage cash flow. The figure increased to 91% in the accommodation and food sector. The survey results come as the government prepares to unveil its July stimulus, which, it’s understood, will contain a range of measures targetted at small and medium sized enterprises in the form of low cost loans and grants. The Central Bank of Ireland’s SME Market Report also suggests that around a quarter of firms had ceased trading temporarily or permanently in April, but this declined to 11% by the end of May, reflecting the gradual reopening of the economy. The main banks reported that SME credit demand increased in the second three months of the year and is expected to increase slightly in the third quarter. Article Source: click here.
Stocks rise as EU leaders reach deal on stimulus package
Stocks advanced globally alongside US equity futures after European leaders reached a deal on a landmark stimulus package. The Stoxx Europe 600 Index added 1 per cent as of 8.10 am in Dublin. Earnings were also in focus, with UBS climbing 2.2 per cent after reporting net new money and profit that beat estimates and expressing confidence about dividends, while Novartis dropped 1 per cent after trimming its 2020 sales forecast. The agreement over the EU recovery fund is further boosting sentiment, following optimism about a vaccine against the coronavirus. A gauge of risk in the region’s investment-grade debt dropped to the lowest since February. Equities in Europe have outperformed US and global shares since mid-May, when the stimulus proposal was first announced, with several strategists and investors citing it as a reason to prefer the region’s stocks. The agreement over the EU recovery fund is “a big deal for the bloc which will see countries borrow together for the first time,” said Jasper Lawler, head of research at London Capital Group Equities rose across Asia, with Australia outperforming after the government boosted job subsidies. Article Source: click here.
EU leaders reach deal on Covid-19 recovery fund after marathon summit
The 27 member states of the European Union this morning signed off on a €1.8 trillion package to fund the next seven years of spending and inject funds into struggling economies to help them weather the devastation of the Coronavirus pandemic. The summit was one of the longest ever, and leaders negotiated through the night once again on Monday before announcing a deal had been reached at 5.30am on Tuesday. “It has been a very challenging number of days negotiating this package but it has been worthwhile. The solidarity displayed throughout this summit is something that I think will stand Europe in good stead into the future,” Taoiseach Micheál Martin said after the deal was clinched. “The Covid-19 challenge is unique, its impact in terms of economic social and political life is very severe and it necessitated a response of this scale and magnitude.” The recovery package involves a €750 billion in grants and loans that will be funded by jointly-guaranteed borrowing by the European Commission, the first time this has been done and a proposal that faced significant resistance from a group of so-called frugal northern member states led by the Netherlands. Article Source: click here.
Martin calling for more details on EU recovery proposal at Brussels summit
Taoiseach Micheál Martin has said that Ireland will make their own contribution to the “own resources” aspects of the €750bn Covid-19 recovery fund. Speaking in Brussels ahead of an EU summit, Mr Martin said Europe needs to give far more detailed consideration to other “own resources” proposals, including for example a digital tax. “The full implications of that at a time of such unprecedented economic upheaval needs to be thoroughly examined until someone commits to that,” he said. “We will not be support that at this meeting, as essentially we need to know the consequences of such measures.” Mr Martin said an awful lot more work needs to be done at a European level to flesh it out. He added that, because Europe has taken such a hit economically, “we do not want to do anything that would create further hits or further unintended consequences”. Article Source: click here.
Ireland remains in EU’s crosshairs despite Apple win
Paul Gallagher, the State’s Attorney General during the depths of the financial crisis, has had a busy time getting back up to speed since Taoiseach Micheál Martin picked him a little over two weeks’ ago for a second stint in office. But there was one dossier that didn’t require much reading in: the Apple file. The Tralee native, who advised the last Fianna Fáil-led administration from the dying days of the Celtic Tiger era in 2007, through the subsequent economic collapse and Troika bailout, picked up a number of gigs representing the State after returning to private practice following the 2011 general election. None was more important than his role on the legal team assembled to fight the Republic’s legal appeal after the European Commission decided four years ago that Apple had received €13.1 billion of illegal state aid through a “sweetheart” tax deal that gave it an unfair advantage over other companies. Article Source: click here.
House parties the potential problem, but pubs sent to financial purgatory again
In the middle of June, just as we were beginning to enjoy the freedom of emerging from lockdown, it was predicted on this page that Ireland would re-enter a national debate on the wisdom of economic reopening in “about one month’s time”. And here we are, bang on schedule, pressing the pause button. There has not been a major spike in infection rates and Ireland’s 14-day incidence of the virus remains among the lowest in Europe, according to the latest country data from European Centre for Disease Prevention and Control. But there has been a noticeable spike in national anxiety over the past fortnight, centred on the risks associated with the fun economy: travel and hospitality. All of this was predictable by anyone who reads foreign newspapers. Literally, it was written. The earlier experience of other countries suggested there would be some uptick in infection rates after reopening, accompanied by harried calls to backtrack. The anxiety is understandable. The virus affects the minds of the healthy just as it ravages the lungs of the sick. Nobody wants to get sick. Article Source: click here.
Reopening pubs could ‘materially add’ to possibility of second Covid-19 wave
Minister for Health Stephen Donnelly has said public health advice shows if pubs reopened now, it could “materially add to the possibility of a second wave” of the coronavirus. Speaking on RTÉ’s Morning Ireland, Mr Donnelly said the Government is prioritising the reopening of schools and healthcare facilities in relation to the Covid-19 pandemic. Mr Donnelly said the National Public Health Emergency Team (NPHET) is very concerned given the ‘R’ number is now between 1.2 and 1.8. The minister said if it is 1.8, then within three weeks we could see be up to 160 cases of Covid-19 per day. The reproductive rate, or ‘R number’, indicates the number of people on average that an infected person will pass the virus on to. He said delaying the reopening of pubs from next week to next month was not an easy decision to make. “We are essentially prioritising schools, healthcare facilities, the economy over the accelerated opening of the pubs,” Mr Donnelly said. Article Source: click here.