British prime minister Theresa May formally initiated the UK's divorce from the EU with the triggering of article 50 on Wednesday, pitching both Britain and the bloc into the undiscovered country.
May notified European Council president Donald Tusk in a hand-delivered letter of Britain's intention to quit the club it joined more than 40 years ago. "The UK is leaving the EU," she said later. "This is an historic moment from which there can be no turning back."
Tusk made no effort to mask his grief. “We already miss you,” he lamented in a tweet, pinned to the top of his Twitter page. In remarks that followed May’s letter, he said there was “no reason to pretend this is a happy day neither in Brussels, nor in London”.
“After all,” he added, “most Europeans, including almost half the British voters, wish that we would stay together, not drift apart. As for me I will not pretend that I am happy today.”
But, happy or not, as May said, there can be no turning back. Now begins the trying task of negotiating a deal that will do the least damage to all concerned. First on the agenda is the UK’s bill for leaving, which will be at least €25.4 billion, according to a think tank.
An analysis by Bruegel concluded the final tally is unlikely to reach the €60 billion quoted by senior EU officials. It said the bill will range between €25.4 billion and €65.1 billion depending on the calculation method used, but it’s likely to be at the lower end.
However, almost one in five debt investors globally said they feared the UK would end the divorce talks without any deal, according to a survey carried out by Fitch, the credit ratings firm.
Indeed, there is evidence of trepidation. IPOs (Initial public offerings) by companies based in Britain have raised €1.41 billion so far in 2017, which is a 28 per cent decline on last year and the lowest year-to-date total since 2012.
Separately, 40 European business lobbies representing companies in 34 countries issued a statement calling for a post-Brexit settlement to preserve the integrity of the single market, deliver a smooth transition and avoid creating “unnecessary” obstacles to trade and investment.
Worst case scenario
There were warnings abound for Irish interests also, as PricewaterhouseCoopers said businesses in the Republic should plan for the worst. Namely, the absence of a trade deal for the UK.
"At this stage, it is likely that World Trade Organisation rules will kick in to govern the future EU-UK trading relationship," said managing partner Feargal O'Rourke.
Business lobby Ibec said an “assertive national effort” was required to avoid the “very real risk of a divisive, damaging Brexit divorce”, especially one that would see the UK exit the EU with no trade deal in place.
The Irish Tourist Industry said the impact of Brexit was already damaging tourism. “The three-month trend from Britain [in visitor numbers to Ireland] shows a decline of 6 per cent but, looking at February alone, there is a very worrying decline of 22 per cent,” said chairman Paul Gallagher.
Irish chief executives were unanimous in viewing Brexit as a strategic error for the UK that will have negative consequences for the Republic. Pat McCann of hotel group Dalata described it as "madness" while FBD head Fiona Muldoon said it was "a real shame".
The good cheer really was in short supply as Lloyd’s of London, the world’s largest specialty insurer, said it was choosing Brussels over Dublin for its EU subsidiary because of its strong regulatory framework.
“Brussels met the critical elements of providing a robust regulatory framework in a central European location, and will enable Lloyd’s to continue to provide specialist underwriting expertise to our customers,” chief executive Inga Beale said. There was better news in relation to JPMorgan Chase, which is in talks to buy a Dublin office building. The lender is negotiating the potential purchase of a building in Dublin’s Capital Dock that would be big enough to house more than 1,000 workers.
The Central Bank is continuing its preparations for a possible influx, setting up new teams to deal with Brexit-related authorisation queries across banking, insurance, investment firms, investment funds and financial market infrastructures.
House prices
There were further indicators this week that houses are becoming scarcer and more expensive.
The latest survey from Real Estate Alliance showed the average cost of a three-bed semi-detached home in Dublin has risen by €15,000, or 3.9 per cent, to €404,167 in the last three months.
The increase was linked to the Central Bank’s recent decision to ease its mortgage-lending rules, which “has had an immediate effect on the market with a large rise in numbers at viewings and potential buyers with mortgage financing”.
Overall, it said the average house price across the country has risen by 10.9 per cent over the past 12 months – a marked increase on the 7.7 per cent rise registered to the end of December 2016.
On the supply side, the Real Estate Alliance noted that it "remains extremely limited", while Sherry FitzGerald, singing from the same hymn sheet, said the number of houses for sale in the Republic has declined 17 per cent to 22,100 year-on-year in January.
The company said the reduction marked a new low in the number of houses available for sale throughout the State, with the figure equating to just 1.2 per cent of the total private housing stock across the country.
In Dublin, the reduction in supply was even more pronounced, with just 2,800 properties advertised for sale in January, down 30 per cent year on year. Supply levels in Dublin have declined by 43 per cent since January 2010.
Separately, growth in the number of people who have obtained mortgage approval rocketed by 42 per cent in the year to February, driven by first-time buyers looking to benefit from looser mortgage lending rules and the Government’s Help to Buy scheme.
The number of mortgage approvals rose to 2,840 in February, up from 1,996 a year earlier, but down from 3,055 in January. The value of approvals was up by 54 per cent to €585 million from €379 million a year earlier.
The Banking and Payments Federation said first-time buyers were driving the growth, accounting for one in two of every mortgage approved in the month. The number of first-time buyer applications also grew strongly, up 50 per cent on the year.
Bonus territory
In other news, Paddy Power Betfair chief executive Breon Corcoran can afford to have a flutter himself as it emerged he received a £798,000 (€926,143) bonus last year.
The group’s annual report shows that Corcoran, who took over as head of the merged entity in February 2016, was paid £1.6 million in remuneration in 2016.
This included a basic salary totalling £642,000, £19,000 in benefits and £96,000 in pension payments.
It gets even better for Corcoran, previously a Paddy Power executive, who is to see his salary rise by 2 per cent this year to €714,000, from €700,000. This includes a payment for his role as a director of the group.
