Syndicated News Archives - P F Power & Co. Accountants

Some jobs and businesses may not be saved in event of no-deal Brexit – Taoiseach

Some jobs and businesses may not be saved in event of no-deal Brexit – Taoiseach

The Taoiseach has warned that some jobs and some businesses may not be saved in the event of a no-deal Brexit at the end of next month.

Leo Varadkar also told the Dáil that there “hasn’t been an enormous take-up by businesses” of a number of schemes set up by the Government to help mitigate the impact of Brexit.

He was answering Dáil questions from Labour Party leader Brendan Howlin, who said the time had come for the Government to “give clarity on the specifics of Brexit preparations”.

Mr Howlin asked how much funding would be made available to sustain jobs in the short and medium term, and how much money would be made available from the European Union in the event of a no-deal Brexit in six weeks’ time.

“The British government was forced, as you know, to publish its Yellowhammer report on the possible effects of Brexit,” he said.

“Do you think, Taoiseach, it is now time for your Government to publish its own detailed clear analysis on the impact for every sector of our economy of a hard Brexit?”

Mr Varadkar responded that Budget 2020 was yet to be agreed and that the details would be announced in three weeks’ time. But he said the “prudent thing to do is to prepare the Budget with a pessimistic scenario”.

He said there would be a “substantial package” in the Budget to support businesses that are vulnerable, and that while most will come from the Government’s own funds, some will come from the EU.

“I need to be honest with people as well,” Mr Varadkar said. “If we end up in a no-deal scenario it will be damage limitation and there may be some jobs that can’t be saved and some businesses that regrettably can’t be saved.

“But we will put together a package that will be significant, that will be meaningful and will allow us to save those jobs and business that are viable in the long term and that have been made vulnerable as a consequence of Brexit.”

The Taoiseach also told the Dáil that the Government does not have any document similar to the British government’s Yellowhammer.

However, he added that it had produced “all that information already” in the Brexit contingency plan document published in July, and in the summer economic statement.

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‘Palpable’ risk of no-deal Brexit remains – Juncker

‘Palpable’ risk of no-deal Brexit remains – Juncker

European Commission President Jean-Claude Juncker said there was a “palpable” risk of a no-deal Brexit and progress on replacing the backstop could not be made to reach a deal until the UK submitted written proposals.

Speaking at the European Parliament, he said “the risk of a no-deal remains real” but that would be the choice of the UK government.

“I said to Prime Minister [Boris] Johnson that I have no emotional attachment to the safety net, to the backstop, but I stated that I stand by the objectives that it is designed to achieve,” he said.

“That is why I called on the Prime Minister to come forward with operational proposals, in writing, for practical steps which would allow us to achieve those objectives.

“Until such time as those proposals have been presented I will not be able to tell you, looking you straight in the eye, that any real progress has been achieved.”

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UK car imports spend races 181% higher in summer months – Fexco

UK car imports spend races 181% higher in summer months – Fexco

New figures show that Irish motorists increased their spending on cars imported from the UK by 181% in July and August compared to the same two months in 2018.

The figures show that the country’s car import boom is picking up speed as the deadline to Brexit looms ever nearer, Fexco International Payments said.

The analysis of 1,500 purchases made through Fexco International Payments also found the number of UK vehicles imported by Irish drivers in July and August was up by 175% year-on-year.

Fexco said the the figures are even more breathtaking when compared to those recorded in July and August of 2016, the months following the Brexit referendum in the UK.

Since then, Irish consumers’ spend on cars imported from the UK has jumped by a huge 451%, while the number of import transactions has raced 291% higher.

Fexco said its data suggests the import boom is being driven mostly by individual motorists rather than car dealers.

Car dealers increased their spending on UK imports by a more modest 61% between 2016 and 2019, a fraction of the 451% surge in import spending made by drivers themselves.

The Kerry-based company’s records also suggest Irish drivers are capitalising on the euro’s strength to treat themselves to a higher-spec car from the UK.

The average amount spent per car in July and August was €16,197, an increase of 32% on the amount of money spent three years ago.

Fexco also said that imports may have been given extra impetus by buyers looking to do a deal before any change in tax and tariffs that might follow a hard Brexit on October 31.

David Lamb, head of dealing at Fexco International Payments, said that the final countdown to Brexit – and the rising possibility of a no deal – have “turbocharged” the popularity of used car imports among Irish motorists.

“The combination of the euro’s current strength against the pound, and the nagging fear that a no-deal Brexit could lead to the imposition of trade barriers between the UK and Ireland, have created a sweet spot that’s prompting many Irish drivers to secure a good import deal while they can,” Mr Lamb said.

“While a chaotic no deal Brexit at the end of October could undermine sterling even further, many tactical car-buyers are concluding that the already favourable exchange rate and tariff-free trade together make a compelling import opportunity,” he added.

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House rebuild costs rise by 6%, SCSI survey shows

House rebuild costs rise by 6%, SCSI survey shows

National average re-build costs have increased by an average of 6% over the past year, the latest Guide to House Rebuilding Costs from the Society of Chartered Surveyors Ireland reveals.

The Guide to House Rebuilding Costs is used by homeowners to calculate the rebuilding costs of their home for insurance purposes.

The SCSI stressed that homeowners should understand the difference between a valuation and rebuilding costs.

A market valuation is the expected amount you could get for your property if it was placed on the open market, but the rebuilding costs are associated with the cost of building or replacing the dwelling.

The SCSI says these figures can be very different.

Today’s guide shows that rebuild costs are up by 8% in Limerick, Cork and Galway over the last 12 months, while the rise in Dublin was a more moderate 5%.

The society said it believes this is linked to increased competition in Dublin, while it also reflects what is happening in the wider property market with prices falling in Dublin and still rising in the regions.

While price increases may have moderated in Dublin, it still has the highest rebuild costs.

The cost of rebuilding a three-bed semi in Dublin, is €208,000, while the cost of rebuilding a similar house in the North West of the country is €130,000.

Micheál Mahon, Vice President of the SCSI, said the cost of rebuilding rose because of the increase in labour rates due to the shortage of construction workers, the impact of new building regulations and the costs associated with disposing of demolition waste.

“The construction sector is experiencing high levels of activity and this increase is having an inflationary effect on construction prices. There are simply not enough construction workers to meet demand and as a result wage costs are rising,” Mr Mahon stated.

“More recently, changes to ventilation requirements for new builds came into effect this year and while they will help reduce heating costs in the long run, this has contributed to the rise in building costs. Thirdly, the costs of disposing of building waste have continued to rise,” he added.

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House rebuild costs rise by 6%, SCSI survey shows

House rebuild costs rise by 6%, SCSI survey shows

National average re-build costs have increased by an average of 6% over the past year, the latest Guide to House Rebuilding Costs from the Society of Chartered Surveyors Ireland reveals.

The Guide to House Rebuilding Costs is used by homeowners to calculate the rebuilding costs of their home for insurance purposes.

The SCSI stressed that homeowners should understand the difference between a valuation and rebuilding costs.

A market valuation is the expected amount you could get for your property if it was placed on the open market, but the rebuilding costs are associated with the cost of building or replacing the dwelling.

The SCSI says these figures can be very different.

Today’s guide shows that rebuild costs are up by 8% in Limerick, Cork and Galway over the last 12 months, while the rise in Dublin was a more moderate 5%.

The society said it believes this is linked to increased competition in Dublin, while it also reflects what is happening in the wider property market with prices falling in Dublin and still rising in the regions.

While price increases may have moderated in Dublin, it still has the highest rebuild costs.

The cost of rebuilding a three-bed semi in Dublin, is €208,000, while the cost of rebuilding a similar house in the North West of the country is €130,000.

Micheál Mahon, Vice President of the SCSI, said the cost of rebuilding rose because of the increase in labour rates due to the shortage of construction workers, the impact of new building regulations and the costs associated with disposing of demolition waste.

“The construction sector is experiencing high levels of activity and this increase is having an inflationary effect on construction prices. There are simply not enough construction workers to meet demand and as a result wage costs are rising,” Mr Mahon stated.

“More recently, changes to ventilation requirements for new builds came into effect this year and while they will help reduce heating costs in the long run, this has contributed to the rise in building costs. Thirdly, the costs of disposing of building waste have continued to rise,” he added.

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Bank to the future: online banking set for big changes

Bank to the future: online banking set for big changes

In the past few weeks it’s likely that your bank, credit union or building society has been in touch to ensure that the contact details they have on file for you are correct. That’s so they can comply with new European rules, coming into force this weekend, that aim to make online transactions more secure.

The addition of ‘Strong Customer Authentication’ is part of the second Payment Services Directive (PSD2) and requires consumers to regularly verify their identity when banking and buying online.

That will most likely involve a code being sent to a user’s designated phone number each time they want to perform certain tasks – like transferring money or making a purchase over a certain value.

This added security measure will be the most instantly apparent change ushered in by PSD2 – but in the long term it probably won’t be the most significant.

That’s because another pillar of the rule changes forces banks to become more open – potentially upending the way people interact with their money online.

The current account

As it stands all Irish banks offer customers access to their accounts via online and mobile – with the features available to users largely the same from one brand to the next.

“All of the core functionalities are the all the same,” said Daragh Cassidy, head of communications and comparison site Bonkers.ie.

Where the big differences lie currently is around ease-of-use, he said.

“How the apps work and intuitive they are, I think there’s a difference.”

This may include the ability to apply for new products online – rather than having to deal with paperwork or branches. Differences can also be seen in the design of certain online banking sites or apps, with some including the ability to log-in with a fingerprint or check an account’s balance at a glance.

All relatively small things, but with the potential to have a big cumulative impact on a user’s day-to-day experience.

“For some banks you still need to type in all of your details [to log in], you then need to type in your personal access code,” Mr Cassidy said. “And it can be really, really time consuming and labourious for something that should really just take a second – if you’re just trying to quickly see how much you have left in your account before payday.”

Even amongst the banks that may be seen as laggards in the area, it is clear that the growing importance of online has not passed them by. Bank of Ireland, for example, has promised a completely new app later this year as part of its massive investment in IT.

But PSD2 represents a more significant shift for all banks in Ireland.

The API’s the limit

The open banking requirements introduced by Europe are technically challenging, however the idea behind them is relatively simple.

All EU-based banks now have to offer a doorway for other, authorised firms to link in to a customer’s account details. That may include other banks, financial services firms or even tech startups.

This doorway is known as an application programming interface – or API – and is the same concept used by Apple and Google to give app developers access to a smartphone’s features, like its microphone or GPS data.

Similar to the best practice there, it also requires customer approval – meaning the user will only share their details with the third parties of their choice.

The value of this may take some time to become clear – however early applications include being able to automatically feed your transactions into budgeting software, or being able to view accounts from multiple banks in one place.

“Perhaps they could be a company that’s involved in lending and rather than you having to give your data in a form, you give them permission to scrape the detail from your account and they can say ‘yep, we can see that that’s your income, it’s coming in every month and here’s where your outgoings are’,” said Peter Oakes, founder of FinTech Ireland.

There are currently just a handful of firms authorised by the Irish Central Bank to provide these kinds of added services, however many others that have approval from other European authorities will also be available here under ‘passporting’ rules.

That means there may be many new functions available to online banking customers in the near future.

“There’s likely to be quite a demand for these sort of things from consumers,” said Peter Oakes, founder of FinTech Ireland.

“Accenture did a study on this and it found that 50% of consumers said they would use one of these products provided it’s secure.”

Bank to the future

Open banking aims to give people more flexibility in how they handle their finances – and more control over their valuable data. That is a big risk to legacy players here, who have often benefited from customers’ reluctance to change providers.

However lenders do not have the luxury of blocking the incoming changes, nor can they afford to sit back and hope that customers do not engage third parties of their own accord.

Such an approach could leave them playing catch up with rivals that take a more proactive attitude. Meanwhile new entrants, like Germany-based N26 and British firm Revolut, are increasingly gaining traction in Ireland; eschewing physical branches for a purely digital-based service.

“For me, those two banks have really gone above and beyond what any of the other banks in Ireland do,” said Mr Cassidy.

As a result incumbent banks here may, somewhat ironically, become the strongest proponents of open banking.

In response to queries Bank of Ireland, AIB and Permanent TSB all said they were engaging with third parties with a view to integrating their services into their online platforms.

Such services are unlikely to suddenly appear on 14 September – but over time online users may be presented with new functions and services through their bank’s interface.

That should be good news for customers – as well as the Irish financial technology firms that are hoping to realise the potential of open banking.

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Petrol and diesel prices could rise ‘significantly’ – AA Roadwatch

Petrol and diesel prices could rise ‘significantly’ – AA Roadwatch

Motorists can expect a hike in the price of petrol and diesel prices within weeks following attacks on two Saudi oil processing plants, according to AA Roadwatch.

The warning came as the cost of a barrel of oil surged after drone strikes on national energy giant Aramco’s Abqaiq processing plant and Khurais oil field at the weekend.

The attack has knocked 5.7 million barrels per day off production, more than half of the OPEC kingpin’s output.

The increase in the price of a barrel may not mean anything right now but it could have a significant impact on consumers of home heating oils as well as motorists, according to the AA Roadwatch’s director of consumer affairs Conor Faughnan.

Mr Faughnan said that while it was hard to say how much of an increase we might see because of the other factors at play, prices at the pump could increase by as much as 6 to 8 cent per litre.

Speaking to RTÉ News Mr Faughnan said unless oil prices drop, Irish consumers will start to see an increase in the cost of petrol and diesel in around four to five weeks time.

Mr Faughnan said: “We’ll find out over the next week or so whether the oil price is going to stay at it’s current high level. We simply don’t know – that depends on market movement.

“But if it does then you will be looking at a significant price increase being evident at Irish pumps in around about four to five weeks time from now. That’s the normal length of the supply chain.”

Mr Faughnan said there are a number of other factors that complicate matters such as the exchange rate between the euro and the US dollar as well as the price of refined product being bought in Europe.

Crude oil is a naturally occurring type of fossil fuel which is extracted and refined and used for petrol, diesel and home heating products.

All of which we use a lot of in Ireland, according to Mr Faughnan. Therefore, he said, when prices increase there is not much we do to avoid them.

Today’s 20% increase in Brent crude oil is the biggest gain since the 1991 Gulf War.

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ECB announces measures to kick start euro zone economy

ECB announces measures to kick start euro zone economy

The European Central Bank today promised an indefinite supply of fresh asset purchases and cut interest rates deeper into negative territory, an effort to prop up the ailing euro zone economy.

The moves come in the final weeks of ECB President Mario Draghi’s mandate.

They will increase pressure on the US Federal Reserve and Bank of Japan to ease next week to support a world economy increasingly characterised by low growth and protectionist threats to free trade.

Yet there were immediate doubts as to whether the ECB measures would be enough to boost a euro zone recovery in the face of a US-China trade war and possible disruption from Brexit.

The ECB cut its deposit rate – the rate it charges banks to hold money – by 10 basis points to a record low of -0.5% from -0.4%.

ECB deposit interest rate cut – a Draghi on savers

It also promised that rates would stay low for longer and said it would restart bond purchases at a rate of €20 billion a month from November 1.

“The Governing Council expects (bond purchases) to run for as long as necessary to reinforce the accommodative impact of its policy rates, and to end shortly before it starts raising the key ECB interest rates,” it said in a statement.

Given that markets do not expect rates to rise for nearly a decade, such a formulation suggests that purchases could go on for years – an eventuality Mario Draghi did not challenge.

“We have a relevant headroom to go on for quite a long time at this rhythm without the need to raise the discussion about limits,” he told a regular news conference after the meeting.

The news triggered a rally in euro zone bonds that would cut the cost of borrowing in the 19-country currency bloc, and pushed the euro below $1.10, prompting expectations that inflation could rise.

US President Donald Trump, who this week called on the US Federal Reserve to follow other central banks in adopting negative interest rates, accused the ECB of seeking a trade gain by deliberately depreciating the euro against the dollar.

“And the Fed sits, and sits, and sits. They get paid to borrow money, while we are paying interest!” he tweeted.

The rate cut will however increase the cost to commercial banks of parking their more than €1 trillion worth of excess reserves at the central bank.

The ECB said it would compensate lenders for part of this charge to ensure they continued to lend to the real economy.

The ECB also eased the terms of its long-term loan facility to banks and said it would introduce a multi-tier deposit rate facility to help them.

Mario Draghi, whose pledge in 2012 that the ECB would do “whatever it takes” to save the euro is credited with helping restore stability at the peak of the bloc’s debt crisis, stressed the currency zone needed more support.

“Incoming information since the last Governing Council meeting indicates a more protracted weakness of the euro area economy, the persistence of prominent downside risks, and muted inflationary pressures,” he said.

Indeed the ECB’s initial, unprecedented €2.6 trillion bond purchase scheme since the financial crisis has had only limited success in stimulating activity.

Data earlier showed euro zone industrial production fell for a second month in July, while Germany’s Ifo institute predicted a recession in Europe’s economic powerhouse in the third quarter.

Although markets had priced in a revival of asset purchases, over half a dozen conservative policymakers spoke out in public against such a scheme, leaving markets in doubt about how bold the ECB’s measures would be.

The decision suggests that many of these sceptics eventually agreed, giving Draghi a comfortable enough majority in what is likely to be his last major policy move before handing over to Christine Lagarde later this year.

The ECB has undershot its inflation target of almost 2% since 2013 so stimulus was essential to maintain credibility.

But policy easing by central banks around the globe, including the US Federal Reserve, also put the ECB in a bind.

Not easing in sync with the Fed also risked pushing the euro higher, which would then dampen inflation and put the bank even further away from its targets.

Draghi’s critics argue that the euro zone’s biggest troubles – a global trade war, Brexit and China’s slowdown – are outside the ECB’s control, so any stimulus would have a limited impact.

They also say the bloc is experiencing a slowdown, not a recession, and that bond purchases, the ECB’s most powerful tool, should be reserved for real crises, especially since the bank has used up much of its firepower in past stimulus rounds.

With Lagarde taking over on November 1, some also argued that the ECB should refrain from making long-term commitments that would tie the hands of the bank’s next president.

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France urges EU rules on cryptocurrencies, warns of Libra risks

France urges EU rules on cryptocurrencies, warns of Libra risks

The European Union should create a common set of rules for virtual currencies, currently largely unregulated in the bloc, to counter risks posed by Facebook’s cryptocurrency Libra, France’s Finance Minister said today.

The 28-nation EU does not have specific regulations on cryptocurrencies.

So far cryptocurrencies have been considered a marginal issue by most decision-makers because only a tiny fraction of bitcoins or other digital coins are converted into euros.

But plans unveiled in June by US social media giant Facebook to launch its own digital currency, Libra, for payments among its hundreds of millions of users in Europe and around the world have triggered a rethink.

Libra could cause risks to consumers, financial stability and even “the sovereignty of European states”, France’s Bruno Le Maire told reporters at a meeting of EU finance ministers in Helsinki.

He repeated his pleas for blocking Libra in Europe, and called for the creation of “a common framework” on digital currencies at EU level.

New EU-wide rules came into force last year to increase checks on virtual currencies’ trading venues with the purpose of reducing risks of money laundering and other financial crime.

But apart from that, virtual currencies move in what is largely a legal limbo in the EU.

Regulators have not yet managed to agree on whether to treat them as securities, payment services or currencies in themselves – the latter option being ruled out by most.

In the absence of specific regulations, EU officials are assessing whether existing rules governing financial instruments could apply, but have so far reached no conclusion.

When asked whether Libra would need a licence to operate in the bloc, a spokeswoman for the EU commission told Reuters: “With the publicly available information on Libra, it is currently not possible to say which exact EU rules would apply.”

“It is likely that the project will require some form of authorisation in Europe, depending on its precise features,” she added.

In Switzerland Libra is applying for a payment service licence, although it could face rules that typically apply to banks, regulators in the non-EU Alpine state said this week.

The EU-wide legal vacuum has paved the way for smaller states to fill it.

Tiny Malta, which already hosts the bloc’s largest online gambling industry and a big finance sector, has devised its own framework to attract virtual currency operators.

It is unclear whether Malta and other smaller EU states would agree with Le Maire’s tough stance on Libra and cryptocurrencies.

Le Maire said the bloc should also work to cut the cost of international payments, which Libra promises to slash.

However, a European plan to develop instant, cheaper payments has been slow to take off.

Real-time payments have been possible in the euro zone since 2017, but only about half of the bloc’s banks have joined the scheme that underpins these transactions, and it is mostly used for domestic payments.

Le Maire also said Europe should consider “a public digital currency” which could challenge Libra. He said he would discuss this issue with other ministers next month.

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Higher rents and mortgages push inflation higher

The annual inflation rate in August rose to 0.7% from 0.5% a month earlier, new figures from the Central Statistics Office show.

Inflation had risen above 1% year-on-year for the first time in six years in March but slipped back below that level in July.

August saw consumer prices rising on the back of higher rents and mortgage repayments as well as increased health insurance premiums and more expensive hair cuts at hairdressers.

The latest figures from the CSO also show that prices in restaurants and hotels also increased last month, while the price of tobacco products rose.

But prices for furniture and furnishings, non-durable household goods and household textiles fell in August, while clothing and footwear prices were also lower on the back of sales.

The CSO noted that transport costs fell mainly due to a reduction in airfares and lower prices for petrol and diesel.

These decreases were partially offset by an increase in the cost of other services in respect of personal transport equipment and higher prices for cars.

Separate figures from the CSO today show that among 37 countries in Europe in 2018, Ireland was the eighth most expensive for food.
Ireland was also the second most expensive for non-alcoholic drinks, including minerals, water, tea and coffee.

Meanwhile, we are fourth most expensive for alcohol and third most expensive for tobacco.

The CSO said that consumer price levels in Ireland are broadly at the same level as Nordic countries such as Sweden, Finland, and Denmark.

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