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Euro zone Q1 economic growth stronger than expected, unemployment falls

Euro zone Q1 economic growth stronger than expected, unemployment falls

The euro zone economy grew more than expected in the first quarter, rebounding from a slump in the second half of 2018, new data showed today.

Meanwhile, unemployment in the euro zone fell to its lowest in more than a decade, the data also revealed.

But economists said the numbers gave the European Central Bank little indication of whether to continue stimulating growth with loose monetary policy or to start tightening.

The European Union’s statistics office, Eurostat, said that according to a preliminary estimate, gross domestic product in the euro zone rose 0.4% quarter-on-quarter in the first three months of 2019.

This was up from 0.2% in the fourth quarter of 2018 and 0.1% in the third.

Year-on-year, euro zone GDP rose 1.2%, the same increase as in the last quarter of 2018.

The Eurostat data include an estimate by Germany of first-quarter GDP growth in Europe’s biggest economy, which has not yet been published.

Economists polled by Reuters had expected a 0.3% quarterly increase and a 1.1% annual expansion.

“The recovery is getting old and no one should expect from a greybeard that he will continue to run at the pace he could achieve in his youth,” ING economist Peter Vanden Houte said.

“And indeed, the elderly are also more vulnerable to shocks. While there are still a number of risks (think of trade tensions, higher oil prices and the Brexit uncertainty) the improving international picture is likely to support eurozone exports in the coming months,” Vanden Houte said.

GDP growth should hover around 0.3% in the remainder of the year, he said, below ECB and European Commission forecasts of growth at 0.4% in the second half of 2019.

“Not great, but probably the best we can expect in the current stage of the cycle,” he said.

The ECB, which put off tightening monetary policy at the end of last year amid persistently weak inflation, had expected first-quarter growth of 0.2%, accelerating to 0.3% in the second quarter.

Separately, Eurostat said that euro zone unemployment fell to 7.7% of the workforce in March with 12.630 million people seeking jobs.

This was the lowest rate since September 2008 and compared to 7.8% of the workforce or 12.804 million people out of a job in February.

The fall in the number of jobless people is likely to eventually put upward pressure on consumer prices.

The ECB wants to see inflation below but close to 2% over the medium term.

“Today’s figures probably haven’t made the European Central Bank any wiser,” ING’s Vanden Houte said.

“The economy remains solid enough not to need extra stimulus. But at the same time not much has to go wrong to bring GDP growth to a standstill. In that regard, wait-and-see remains the most likely ECB monetary policy stance,” he said.

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Unemployment rate remains at 5.4% in April – CSO

Unemployment rate remains at 5.4% in April – CSO

New Central Statistics Office figures show that the country’s unemployment rate remained at an 11-year low of 5.4% in April.

The CSO said the seasonally adjusted number of people who were without a job stood at 129,700 in April, a decrease of 10,200 when compared to the same month last year.

The unemployment rate has fallen steadily from a financial crisis peak of 16% in 2012. It had provisionally dropped as low as 5.1% last year but the figures have since been subject to a series of quarterly revisions.

Today’s CSO figures show that the unemployment rate for men in April fell to 5.2% from 6% the same time last year, while the rate for women fell to 5.5 from 5.7%.

They also reveal that the seasonally adjusted youth unemployment rate fell to 12.8% in April from 13.5% in March.

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High housing costs key driver of wage demands, conference told

High housing costs key driver of wage demands, conference told

HIGH rents and housing costs are driving wage demands that have become the biggest single challenge facing businesses, according to Kevin Sheridan, managing director of Sheridan Cheesemongers.

“Rising wages puts pressure on staff numbers and has a ripple effect through the business – I think this comes from the housing crisis,” Mr Sheridan said..

“We need it fixed and fixed sustainability,” he added.

Mr Sheridan set up the cheese business with his brother in 1995.

He said that at the time there were “no jobs – rents were low so people were setting up small businesses”.

He was speaking at the ‘Family Business Values’ conference at Dublin City University yesterday, which focused on the unique experience of family-owned firms. The legacy of the late Feargal Quinn, who died last week, was remembered by a number of speakers at the event.

Speaking at the event, Keeling Fruit’s Caroline Keeling said the group was now having to deal with issues which were not a factor 15 years ago, such as sustainability and the environment.

She said the preference in choosing a leader for a family-owned business would always be for family members, but “the biggest thing is to protect the business”

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Insurance revamp calls intensify as play centres saved by UK deal

THE Government has been urged not to ease up on insurance reform after 1,000 jobs were saved when play centres secured insurance cover.

Some 61 play centres were threatened with closure over difficulties getting insurance.

The Alliance for Insurance Reform said there was still a need for major changes in the insurance and legal sectors.

Meath businesswoman Linda Murray has managed to keep her play centre in Navan open by securing insurance for her firm, and 60 similar facilities across the country.

Soaring premiums and the reluctance of some insurers to quote businesses for cover because of false and exaggerated claims meant the play centres could not get cover.

Ms Murray broke down when she told TDs and senators on the Oireachtas Finance Committee about the situation.

She begged committee members: “Save our livelihoods, save the livelihoods of our staff, and give our children somewhere to play.”

Ms Murray feared her play centre would have ended up shutting with the loss of 12 jobs. Insurers were quoting a premium for the next year of €16,500, a 1,000pc rise in the past five years.

She started up a group of 61 play centres, called the Play Activity and Leisure Ireland (PALI). That group has now persuaded an insurance broker to get a UK provider to write policies for all of them.

“We presented ourselves as a group and approached five in Ireland and 15 in the UK and two of the insurance companies in the UK agreed to underwrite us,” she said.

However, she is angry at the lack of help from the Government and the Irish insurance industry regarding her plight over the last number of months.

“We need to remember that insurance reform still has to happen. We need to tackle the compensation culture,” she said.

The Alliance for Insurance Reform, where Ms Murray is a director, welcomed the fact that PALI has secured cover for its play centre members for the next two years.

Director of the alliance Peter Boland said: “Let the Government and the vested interests be on notice that this issue and our campaign will not be pausing for breath until policyholders have received real reform and do not have to scramble for short-term fixes just to keep their doors open.”

He said there was an urgent need to reduce high awards for very minor injuries.

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Self-employed people to qualify for extra jobseeker’s payments under new initiative

Self-employed people to qualify for extra jobseeker’s payments under new initiative

Self-employed people will become eligible to claim a jobseeker’s welfare payment from November, based on their social insurance contributions.

Minister for Employment Affairs and Social Protection Regina Doherty has said the initiative will provide an income safety net to thousands of small and medium businesses throughout the country.

However, the Irish Congress of Trade Unions has criticised the failure to increase the rate of insurance contribution by the self-employed, which remains at just over one quarter of that paid by employees.

In a statement, Ms Doherty described November’s planned social insurance benefit scheme for the self-employed as an assurance to people setting up or running their own business that the State is there to support them if their business ceases operations.

Applicants will have to satisfy an as yet unspecified PRSI contribution condition and those who do not have sufficient PRSI contributions will continue to be able to apply for the means-tested jobseeker’s allowance.

She added that the drafting of the necessary legislation has begun.

The Irish Congress of Trade Unions (ICTU) welcomed the change but it objected to the Government’s failure to increase the social insurance contribution of the self-employed.

ICTU’s policy officer policy officer Dr Laura Bambrick said they pay a 4% rate compared to a 14.95% contribution for employees.

She said that historically, the self-employed did not have access to the full range of social welfare payments, which was the justification for their smaller PRSI contribution. But she said this is no longer the case.

“Even before this new payment comes into effect, the self-employed now have access to 80% in value terms of contributory benefits while contributing a mere 27% of the effective rate of social insurance paid in respect to PAYE workers,” Dr Bambick said.

She cited last year’s survey of 20,000 self-employed workers conducted by Ms Doherty’s department in which over four in five of all respondents (88%) said that they would be willing to pay a higher social insurance contribution in return for additional benefits.

“Officials estimate a 0.5% increase in the self-employed 4% PRSI rate would yield €77.5m per annum,” the ICTU official said.

She accused the Government of ignoring the finding and instead introducing the new payment for the self-employed without a corresponding increase in their social insurance contribution rate.

Dr Bambrick said this is happening at the same time when the Government is making it more difficult to qualify for the full-rate old age pension and increasing the pension qualifying age to 68 out of their fears for the future sustainability of the Social Insurance Fund.

“(This) crystallises the unfairness and short-sightedness of Government thinking,” Dr Bambrick added.

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US watchdog swoops on $55bn oil merger

US watchdog swoops on $55bn oil merger

The US Securities and Exchange Commission (SEC) yesterday obtained an asset freeze in connection with suspected fraudulent trading in Anadarko Petroleum Corp before the oil company agreed to be acquired by rival Chevron.

US District Judge Gregory Woods in Manhattan granted the freeze over accounts linked to suspicious purchases by unknown buyers of Anadarko securities between February 8 and April 1, 2019, according to a court filing. The filing did not name defendants, nor did it cite the value of the purchases in question.

The SEC declined to comment on the case, while Anadarko could not immediately be reached for comment.

Chevron announced on April 12 it would buy Anadarko for about $33bn (€29.5bn). Another oil company, Occidental Petroleum Corp, launched an unsolicited $38bn bid for Anadarko on April 24.

Defendants that receive the freeze notice must not withdraw, transfer or dispose of assets related to the allegations, the filing said.

Anadarko shares have trailed other energy companies in recent years, but they recently got a boost from the twin takeover offers.

The ‘Financial Times’ reported that Anadarko Petroleum was on course to accept the takeover offer from its US rival Occidental Petroleum, which gatecrashed the previously agreed sale to oil major Chevron. Including debt Occidental’s deal values Anadarko at $55bn. If it is accepted it would be a rare win for a hostile bid.


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Self-employed to qualify for welfare pay of €203 a week

Self-employed to qualify for welfare pay of €203 a week

Self-employed workers will be entitled to weekly jobseeker payments if they become unemployed from November.

The new social insurance benefit scheme, announced today, aims to provide assurance to people setting up or running their own business.

Up to €203 will be provided for nine months for people with 260 or more self-employment PRSI contributions or six months for anyone with less.

Welfare changes for self-employed workers is one of the most significant policy decisions taken by the Government since the crash.

Under the scheme, applicants will have access to the full range of employment supports available to other jobseekers.

Graeme McQueen, head of communications at Dublin Chamber, said the organisation was “pleased” to see moves being made to improve the situation for self-employed workers.

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Decrease in number of workers earning minimum wage or less

Decrease in number of workers earning minimum wage or less

There was a 9% decrease in the number of workers earning the minimum wage or less in the last three months of 2018 compared to the previous year, according to CSO figures.

7.6% of employees earned the minimum wage or less in Q4 of 2018, down from 8.6% in the same period of 2017.

That amounts to 137,200 employees who reported they earned the minimum wage or less and this was down by 13,500 year-on-year.

The information comes from the Labour Force Survey, which is the official source of employment statistics in Ireland.

The figures also show that women are more likely to earn the minimum wage or less than men, which was been consistent since the statistic was first measured in 2016.

Of the 137,200 employees who reported earning the minimum wage or, 75,900 or 55.3% were female while 61,300 or 44.7% were male.

In total, 6.8% of all male employees in the State earned the NMW or less and the corresponding figure for females was 8.3% in Q4 2018.

The services sector accounted for 83.5% of all employees who reported earning the minimum wage or less, while half of the total figure recorded were in the 15-24 age group.

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Govt launches plan to boost financial services sector

Govt launches plan to boost financial services sector

The Government hopes to increase direct employment in the financial services sector to 50,000 by 2025, according to a new strategy launched this morning.

The ‘Ireland for Finance’ plan is the latest Government initiative targetting the international financial services sector.

There were 44,000 people directly employed in the sector at the end of last year, while the previous five-year strategy for the sector – launched in 2015 – has created 9,000 jobs, the Government has said.

The reduced employment growth target is partly attributed to the impact of artificial intelligence and automation in the sector.

Minister for Finance Paschal Donohoe said the new plan “has been formulated to meet the challenges and opportunities that lie ahead”.

He said “Ireland has within its grasp the opportunity to be a world leader by 2025” as a global location for financial services.

“It is essential that both the public and private sectors and the educational institutions continue to work together to avail of this great opportunity,” he said.

The new strategy has three “horizontal priorities” – regionalisation, sustainable finance and workforce diversity.

New structures to encourage the development of the sector will include bringing the Central Bank into a new stakeholder engagement group.

There also plans to develop a ‘Women in Finance’ charter and to foster links between tech and finance companies in Dublin and other regions.

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Mortgage approvals soar but would-be buyers wait on supply

Mortgage approvals soar but would-be buyers wait on supply

NEW figures show the scale of pent-up demand among would-be home buyers with approvals running well ahead of mortgage drawdowns.

Figures from the Banking and Payments Federation, which represents lenders, show that 8,577 new mortgages to the value of €1.884bn were drawn down by borrowers during the first quarter of 2019.

First-time buyers remain the main driver of mortgage lending in the first three months of this year, accounting for 47.3pc of all loans drawn down and 47.9pc of the value of borrowing.

Separate figures show there were 4,142 mortgages approved in March, more than half for first-time buyers.

Approval are up 22.8pc compared to March last year. The number of mortgage approvals has raced ahead of drawdowns in recent years as first time buyers in particular have struggled to find homes to buy amid tight supply and constrained lending rules.

The figures also show a rose in the number of re-mortgages and mortgage switching approvals, a trend pushed by regulators keen for consumers to avail of potentially lower costs.

“The number and value of mortgages actually drawn down by borrowers during Q1 2019 show good growth on corresponding 2018 activity,” BPFI’s director of Public Affairs, Felix O’Regan, said.

“This reflects the appropriate response by lenders to increased demand for mortgage finance. Furthermore, the uplift in the number and value of mortgages approved in March indicates that further growth in drawdown activity can be expected,” he added.

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