Conflicts of interest, spies, treachery, and prostitutes in a Moscow hotel room: US president-elect Donald Trump's in-tray this week looked like the plot of a new House of Cards series. Nevertheless, Trump faced the media in his long-awaited first press conference since being elected, outlining some of his vision for the US. The vista that unfurled made for uneasy viewing.
Trump said he would maintain ownership of his global business empire, but hand control to his two eldest sons. He is to resign from all positions and move his assets to a trust to prevent him taking actions as president that would benefit him personally.
This arrangement, ethics watchdogs said, would not prevent conflicts of interest in the White House. Unlike other US government officials, however, the president is not required by law to steer clear of conflicts of interest.
Somewhat undermining his own assurances, Trump, with a hint of triumphalism, revealed to the gathered assembly of the world’s media that just last week he had turned down a $2 billion (€1.88 billion) development deal in Dubai.
The businessman also underlined his plans to keep US investment at home, which will have serious repercussions for Ireland. The pharma and medtech sectors, which are “getting away with murder”, partly because of drug prices, came in for special attention.
Many US pharma companies have moved their business out of the US in an effort to cut their tax bills.
“We’ve got to get our drug industry back,” Trump said. “Our drug industry has been disastrous. They’re leaving left and right.”
The Republic has been among the most successful countries in persuading US pharmaceutical and medical device companies to establish manufacturing and research operations outside the US. More than 50,000 people here are employed in these sectors.
Trump’s scarcity of detail on his economic policy drove Wall Street’s main indexes to their worst start this year, while his comments on the pharma and medtech sectors ended a six-day winning streak for health stocks.
Separately, former US treasury secretary Lawrence Summers, a former chief economic adviser to President Barack Obama, attacked Trump’s proposals on several fronts. His plans for deregulation, he said, would set the stage for the next financial crisis.
“The deregulation in some areas, like finance, is hugely dangerous,” he said. “Who wants to go back to the era of predatory lending? Who wants to go back to the era of vastly over-levered banks?”
Brexit relocations
The “who gets what” debate in the messy Brexit divorce continued this week, but many financial institutions aren’t waiting around to find out who gets the spoils.
Irish Life Investment Managers reported more than 50 inquiries from companies considering relocating activities from the UK following the referendum last June. The company’s managing director, Patrick Burke, declined to identify any of the interested parties but said they were largely financial services companies, many of whom have existing operations in Ireland.
One bank, HSBC, even pledged to take “pre-emptive action” and move its activities before the article 50 negotiations are completed.
“Our regulators and customers expect us to plan for the worst,” HSBC chairman Douglas Flint told a UK parliamentary committee. “We need to assume what might happen if we end up with a break after the article 50 process with no vision of where we are going and no transitional arrangement.”
Article 50 refers to the trigger for Britain to formally begin the process of leaving the EU.
Mr Flint reiterated assertions made before the EU referendum that the bank would move its UK operations in the event of a vote to leave. He said it could move “to France or indeed to Ireland or Holland or any other place within Europe we have operations”.
Office leasing activity in Dublin, meanwhile, remains near record levels. Property consultant CBRE published statistics showing that more than 245,000 sq m of commercial space was leased in 2016. The average in the capital is about 172,000 sq m a year.
Despite that, Lord Mayor of Dublin Brendan Carr claimed this week that Dublin was being “bad-mouthed” and “challenged” by cities competing for post-Brexit business, and urged State agencies to up their game.
Sterling repercussions
Any exodus from London hinges on Britain’s access to the single market. After UK prime minister Theresa May said she was not interested in keeping “bits” of EU membership – sparking fears of exile from the market – the pound posted its worst day in three months.
The struggles the British currency has undergone since the referendum in June have savaged Irish exports. Bord Bia's annual Export Review and Prospects Report showed the fall in sterling is estimated to have cost Irish food and drink exporters €570 million in 2016.
Trade with the UK fell by 8 per cent, although the report also noted an increase of 2 per cent on export values last year, setting a new record of €11.15 billion. This marked the sector’s seventh consecutive year of growth and an expansion of 41 per cent since 2010.
Following the dip in the value of sterling, Bank of England governor Mark Carney told MPs that Brexit was no longer the biggest single risk to Britain’s financial stability. He said the threat had receded since the vote, partly because of actions the bank had taken in the days that followed it.
However, the UK’s Centre for Economics and Business Research projected that the UK economy will grow at its slowest pace since 2009 this year as soaring inflation and lacklustre wage growth bring an end to Britain’s consumer spending boom.
Its forecast shows growth pulling back sharply to 0.8 per cent in 2017, less than half the 1.8 per cent expected for 2016.
Company news
Workers at Pfizer’s Ringaskiddy and Little Island plants in Co Cork have voted for industrial action over the company’s move to close a non-contributory defined-benefit pension scheme. The company said it was disappointed with the outcome.
Elsewhere, Tullow Oil’s founder, Aidan Heavey, has announced he is to step down as chief executive in April to become chairman for up to two years as the exploration group undergoes a change in leadership. Chief operating officer Paul McDade will succeed him as chief executive. Heavey has led the company for 31 years.
In Mexico, a division within the SCT, the Mexican government’s department of communications, has begun an internal inquiry into allegations of tendering corruption made by Galway businessman Declan Ganley’s Rivada Networks.
Rivada alleged late last year that it was wrongly excluded from bidding for a contract to build a $7 billion (€6.6 billion) wholesale mobile-phone network, a project known as Red Compartida. The contract has been awarded to the only other bidder.
Meanwhile, back home, UK property group Hammerson and Irish Life have begun work on a €1.5 million refurbishment of the Ilac Centre in Dublin’s north inner city.
