UK chancellor of the exchequer Philip Hammond took to his feet in the House of Commons on Monday and declared that the era of austerity was coming to an end.
It was budget day, which is often an excuse for broad-sweeping, grandiose statements, but Hammond will hope the remark does not come back to haunt him over the next few years, what with Brexit and so much uncertainty shrouding the future of the United Kingdom.
“We are at a pivotal moment in our EU negotiations and the stakes could not be higher,” he said. “Get it right, and we will not only protect Britain’s jobs, businesses and prosperity but we will also harvest a double deal dividend.”
One of Hammond's headline measures was a 2 per cent digital services tax that would hit tech giants such as Google, Facebook and Amazon from 2020. He said spending would rise by 1.2 per cent each year for the next five years and promised even more if the UK gets a good Brexit deal.
There was talk in London that a deal might be struck over the next three weeks. Brexit secretary Dominic Raab told a parliamentary committee he would give evidence before it "when a deal is finalised", adding that he expects November 21st to be "suitable".
Hammond’s comments jarred with remarks by S&P Global, the rating agency, which said the chances of a no-deal Brexit have increased and warned that such an outcome would spark a long recession and a likely reduction in Britain’s credit rating.
Indeed, it would seem that many Britons are also less than confident. The Department of Foreign Affairs in Dublin received 80,752 applications for an Irish passport from British residents last year, with the number of refused applications in just double digits.
The talks remain deadlocked on the Northern Ireland backstop issue – the guarantee of no hard border if all else fails. The European Union is said to be examining the possibility of giving further guarantees to London in an attempt to force a breakthrough.
The compromise would involve giving firmer assurances to the UK in the formal withdrawal agreement regarding the prospect of it as a whole remaining in a customs union with the EU for a period after Brexit.
Meanwhile, British bank Barclays is to ask the UK's high court in the coming months to allow it transfer business with a value of about €250 billion to the Republic as the lender steps up its Brexit preparations.
Government under EU pressure over digital sales tax plan
Another cloud on the horizon for Minister for Finance Paschal Donohoe is the European Commission proposal for an EU-wide 3 per cent digital sales tax.
The word from Europe this week was that the Government is under increasing pressure to agree to the plan ahead of a meeting of European finance ministers in Brussels on Tuesday.
The Government has consistently resisted the proposal, but there has been heavy lobbying from the commission, the French government and the Austrian presidency of the EU to have the draft directive approved by the end of the year.
The measure would impose a 3 per cent tax on certain digital revenues, such as from online advertising, to be imposed by the state where digital transactions take place – meaning, in effect, that states with larger markets would benefit.
The plan is pertinent in light of the recent erosion of foreign direct investment to the Republic, which dropped from €798 billion to €744 billion in 2017 on the back of a decline in investment by US multinationals, which was down €45 billion.
Figures published by the Central Statistics Office this week showed Irish stocks of investment overseas also declined, closing at €717 billion at the end of 2017 compared with €813 billion a year earlier.
The net FDI for Ireland at the end of 2017, according to the figures, was a deficit of €27 billon, down €42 billion from the net position at the end of the prior year.
On a related note, a study by the World Bank ranked the Republic 23rd as a place to do business, just ahead of Germany. New Zealand topped the poll, while the UK came in ninth.
The report ranked 190 economies taking into account trading regulations, property rights, contract enforcement, investment laws, the availability of credit and a number of other factors.
Aryzta’s struggles continue as Smurfit Kappa performs strongly
These are testing times for troubled food group Aryzta which held its annual general meeting this week near the Swiss alpine city of Zurich.
The serene nature of the surroundings did little to quell shareholder dissatisfaction as the maker of Cuisine de France and McDonald’s burger buns narrowly voted through a proposed €790 million capital raise.
Aryzta chairman Gary McGann had warned shareholders that the capital raising was necessary to pay down debt and fund a major restructuring. Failure to do so, he said, would see the business “limp along and be a wounded animal for quite a length of time”.
The company faced considerable shareholder opposition over the plan with its largest investor, Cobas Asset Management, voting against the plan. In the end, the resolution was passed by just 53 per cent of shareholders, with 47 per cent against.
The corporate landscape is brighter elsewhere, as paper and packaging group Smurfit Kappa beat market projections in the third quarter for core earnings and confirmed that its full-year results would be "materially better" than last year.
The Irish company has also agreed to acquire a paper mill and corrugated plant in Serbia for €133 million from Kappa Star Group.
Elsewhere, Irish aircraft lessor SMBC Aviation Capital is opening a subsidiary in Hong Kong in a move to bring it closer to Asian customers. Hong Kong is a key centre for aviation-related business.
Finally, in a sign of the times, hundreds of staff from Google’s Dublin office joined thousands of colleagues from across the world in staging a workplace walkout in protest at the company’s lenient treatment of executives who are alleged to have engaged in sexual misconduct.
