These are troubling times for Irish exporters as the triggering of article 50 and Britain's exit from the European Union loom on the horizon. This week, however, brought the first clear picture of how Brexit is affecting the Republic's trade with its neighbour.
Figures for 2016 from the Central Statistics Office showed the tumultuous months endured by sterling since the June vote wiped nearly €500 million, or 4 per cent, off the value of Irish goods exports to Britain.
Despite the sharp drop in business with our biggest trading partner, there were signs that may encourage exporters to shun the Union Jack for the Stars and Stripes, with the figures indicating a 12 per cent increase in the value of exports to the US.
Indeed, the headline figure for exporters was very positive, with the value as a whole rising to nearly €117 billion last year, the highest annual total on record. This represented an increase of €4.5 billion or 4 per cent on the previous year’s total.
Despite that, Food and Drink Industry Ireland (FDII) called for urgent new policy measures to meet Brexit challenges. “Ireland’s largest indigenous sector faces substantial challenges in the years ahead in a world that has changed radically in 12 months,” said FDII director Paul Kelly.
He called for range of policy measures to ensure that the Irish agri-food sector remained innovative and competitive, including the reintroduction of the employment subsidy scheme and enterprise stabilisation measures which were applied during the crash.
Britain is also Irish racehorse breeding’s biggest export market, taking eight out of every 10 thoroughbreds sold abroad. The business is worth €225 million a year to a largely rural industry.
The headline figure for exporters was very positive, with the value as a whole rising to nearly €117 billion last year
Horse Racing Ireland chief executive Brian Kavanagh said weakened sterling and the risk of trade barriers could damage the sector. "Any barrier to trade flows or the exchange rate could make Irish horses more expensive or result in lower returns to vendors," he said.
Threats from UK exit continue to spread
The concerns surrounding Brexit are beginning to permeate an increasing number of sectors on both sides of the Irish Sea.
Irish Aviation Authority head Eamonn Brennan warned that a new Air Service Agreement will have to be reached between the EU and the UK after Brexit. He stressed the importance of air connectivity between the UK and Ireland for trade and tourism.
Separately, a new survey showed Brexit was already having a negative impact on many Irish companies. The latest KBC/Chartered Accountants Ireland business sentiment index reveals that many firms expect growth in volumes this year but are increasingly cautious on hiring due to accelerating wage costs and wider geopolitical concerns.
The index showed a reading of 104.8 for the fourth quarter, a modest improvement from the 100.1 seen in the prior indicator but well below the peak reading of 131.1 recorded a year ago.
Consumer sentiment is also on the slide, as a Red C poll showed 39 per cent of consumers expected an improvement in the economy, compared with 48 per cent in October. Some 77 per cent of consumers said they were worried about the impact Brexit would have on Ireland, up from 72 per cent the last time the survey was conducted.
The Central Bank has been working to mitigate the fallout and capitalise on the opportunities in relation to Brexit. It has allocated 28 out of 170 new full-time staff from the end of last year to address Brexit-related issues.
In the UK, tech start-ups were initially confident they wouldn’t be harmed by the upheaval, but even they are now beginning to worry. A poll of 940 executives found that Brexit, set to be triggered next month, is sowing anxiety about fundraising, the hiring of non-British employees and accessing the European market.
In the North, the DUP, which is on an election footing, said it was “open to looking” at reducing the rate of corporation tax to 10 per cent as it sought to deal with the trouble coming.
More ups and downs in property market
A report by rating agency Standard & Poor’s that warned of “crisis legacy issues” in the property market coincided with full-year results for the State’s largest private landlord showing its profits jumped 52 per cent last year.
Standard & Poor’s said it could take another decade before supply matches demand in the Irish property market, in particular highlighting the high levels of household debt that prevailed eight years on from the crash.
With house prices in 2016 still 30 per cent below their peak, many households remain in negative equity, unable to move on, it said. Another issue was the low level of investment in residential construction since the crash.
The latter point, in particular, has contributed to stellar profits for Ires Reit, the State’s largest private landlord, which saw profits jump 52 per cent to €47 million last year on the back of strong market demand helped by a “significant shortage of housing”.
It wasn’t all plain sailing for the company, however, as it was knocked back in a planning application for a 492-apartment development in Dublin’s Sandyford. It was asked to resubmit proposals for its Rockbrook site after planners highlighted height and density concerns.
Meanwhile, property website daft.ie’s quarterly report said the average cost of renting a home was now at the highest level on record and climbing faster than at any point since the company started tracking figures in 2002.
It said rents went up 13.5 per cent in the 12 months to the end of December, taking the average monthly rent across the State to €1,111.
Despite all that, the Joint National Housing Conference, which took place in Dublin Castle on Tuesday, heard the number of vacant homes in the Republic was at twice the level of a normal functioning marketplace.
The State has just more than two million dwelling units for a population of 4.75 million, translating to one unit for every 2.35 people. However, there is a vacancy level of 12.8 per cent, well over the 6 per cent expected in normal conditions.
Property website daft.ie's quarterly report said the average cost of renting a home was now at the highest level on record
Separately, Ulster Bank’s latest purchasing managers’ index suggests activity in construction is continuing to bounce back from the crash. Another jump last month led to the fastest rise in employment in the sector since 2004.
Aryzta shares soar as chief executive leaves
Shares in Swiss-Irish food group Aryzta skyrocketed 21 per cent on Tuesday after chief executive Owen Killian tendered his resignation.
Killian’s departure had been on the cards for some time, particularly following a profit warning in late January that earnings could plummet by 20 per cent this year as it lost biscuit and other baked goods contracts in the US.
Also on the way out of the company, which owns the Cuisine de France products, are chief financial officer Patrick McEniff and chief executive of the Americas region John Yamin. All will leave the company at the end of its financial year in July.
Better news on the jobs front
After last week’s announcement of big job losses at HP in Leixlip, there was better jobs news as recruitment website Indeed announced plans to almost double the headcount at its European headquarters in Dublin.
The company, which currently employs 530 people in the Republic, is to take on an additional 500 staff over the next two years. These will be in a number of areas including sales, client services, HR, business development, marketing, finance, strategy and operations
Added to Friday’s announcement from Microsoft of 600 new jobs, it was a strong week for IDA Ireland.
