Full steam ahead as House of Commons sets Brexit train in motion

It was the week when the House of Commons voted overwhelmingly to give British prime minister Theresa May the power to trigger article 50 and set in motion the chain of events that will lead to the UK’s exit from the EU.

Within 24 hours, Brexit secretary David Davis presented parliament with a White Paper setting out the UK government's negotiating strategy ahead of its withdrawal.

The 77-page document, uninspiringly entitled The United Kingdom's Exit From And New Partnership With The European Union, said the UK would seek to negotiate a free trade agreement, which "may take in elements" of the single market arrangement.

ExpandAutoplay

Image 1 of 3

Construction: on the rebound. Photograph: Chris Ratcliffe/Bloomberg

“It makes no sense to start again from scratch when the UK and the remaining member states have adhered to the same rules for so many years,” it added.

CSO to remove ‘leprechaun’ from economic statistics

---

John Magnier picks up English estate for reported €52m

---

Services activity accelerates at sharpest rate since Brexit vote

---

There was also a nod to the existing set-up for customs arrangements. “We will seek to maintain many of the facilitations that businesses currently enjoy,” it said. Customs procedures, if required, will be “as frictionless as possible”.

However, in terms of "side deals" that may emerge from the talks, Irish Central Bank governor Philip Lane was reported to have said he did not believe such an outcome was likely.

Lane also dismissed the suggestion that a “new London” would develop as a financial services centre in the EU. Instead, he said, there is likely to be fragmentation across cities.

Despite Lane playing the role of the party pooper, Minister of State for Financial Services Eoghan Murphy was in London to promote Ireland as the "location of choice" for financial services companies looking to access the single market.

He said there have been more than 100 inquiries from such groups to date, and that he expects more to begin rolling in shortly.

For one thing, Luxembourg fund management company FundRock said it would open a Dublin office to serve its growing Irish base and to leverage on post-Brexit opportunities.

Separately, Japanese securities group Daiwa said it was considering Dublin and Frankfurt as candidates to host its European operations if it moves out of London following Brexit.

Royal Bank of Scotland Group indicated the bank will probably pick Dublin as its European base following Brexit, but said it was only talking "tens" of employees, as the institution already has operations in the euro zone in the form of Ulster Bank.

For those institutions that do decide to set up camp on the banks of the Liffey, there will be plenty of office space to choose from. Hibernia Reit agreed a new deal with Iconic Offices that will see 21,000sq ft of office space made available.

Meanwhile, the UK continued to more or less defy the Brexit naysayers. The Bank of England hiked its growth forecasts for the next three years, with gross domestic product projected to rise by 2 per cent this year; 1.6 per cent in 2018; and 1.7 per cent in 2019.

Policymakers voted unanimously to keep UK rates on hold at 0.25 per cent, although rate-setters warned a consumer spending slowdown was still on the cards due to soaring inflation caused by the weak pound and poor wage growth.

Despite sterling’s woes since June’s referendum, there was increased demand from the UK for Irish manufacturing in January, which was generally robust with a fifth successive monthly expansion in new export orders.

Trump’s travel and immigration plans

Meanwhile, US president Donald Trump’s crusade to turn Washington and the international order on its head continued, as he barred entry from seven predominantly Islamic states.

Apple, which employs large numbers of foreigners, said it was considering taking legal action against the executive order. The company's founder Steve Jobs was, after all, the son of a Syrian immigrant.

There were ructions too in the wider industry, which relies on foreigners to make up for the dearth of homegrown engineering talent needed to write advanced software and build complex machines.

Another Trump plan – this time to overhaul a work-visa programme that technology firms regularly use to hire tens of thousands of employees each year – could have devastating consequences for Irish start-ups and workers in the US.

A draft of an executive order seen by Bloomberg proposed forcing tech firms, including Microsoft, Google, Apple and Facebook, to try to hire Americans before casting the net wider for foreign workers. More than 3,200 such visas were issued to Irish citizens between 2010 and 2015.

For all the controversy he is causing though, Trump's influence on the business world has been pretty positive. Federal Reserve officials left interest rates unchanged due to rising confidence among businesses and consumers.

Margrethe Vestager addresses Oireachtas committee

On Kildare St, fresh from the visit of EU economics commissioner Pierre Moscovici last week, parliamentarians welcomed competition chief Margrethe Vestager, who led the European Commission’s Apple investigation.

Vestager told an Oireachtas committee she believes the iPhone maker owes the Republic virtually all of the €13 billion of back-taxes the EU has ruled the Government must collect. She had previously suggested other European countries may be entitled to a slice of the pie.

Minister for Finance Michael Noonan indicated to the committee that it might take months to finalise the transfer of the cash into escrow.

Interestingly, despite the State’s appeal of the EU ruling, he also said he could not defend Apple taking advantage of “mismatches” in the tax laws of different countries to minimise tax payments.

“Ireland is not seeking to defend the outcome achieved by the company,” he said. “I don’t think Apple worldwide were paying sufficient tax.”

Separately, Nama paid €158 million to the Revenue Commissioners last November as a preliminary tax payment after the Government closed off a loophole in the legislation governing section 110 companies.

And on a related note, Dublin law firm and corporate tax adviser Matheson abandoned the use of three registered charities that helped its clients, including some so-called "vulture funds", to avoid tax on billions of euro of high-risk assets.

Good news on the economy

Despite the Government’s fire-fighting internationally, there are plenty of causes for cheer to be found in the economy, including exchequer figures which showed tax revenue in January was up more than 6 per cent on last year.

The boost was largely attributed to a pick-up in consumer spending over Christmas, which boosted VAT receipts, netting the exchequer €2.3 billion. Overall, Revenue collected almost €6.8 billion in the first month of 2017, some €272 million more than last year.

Figures from the Central Bank showed Irish households have reduced debt as a proportion of disposable income more than any other state in the EU over the past year, but they nonetheless remain the fourth most indebted in the bloc.

The live register meanwhile recorded one of the largest monthly declines of the past year in the number of people signing on to avail of benefits. Figures show the number of claimants fell by 3,500 to stand at 278,600.

Despite all that, the housing crisis remains a major concern for Government. Global ratings agency Moody’s forecast that property prices will rise by 5 per cent this year due to a shortage in supply, the relaxation of mortgage rules, as well as the State’s new Help To Buy scheme. Some 2,000 people have applied for it in the first month.

There may be some light at the end of the supply tunnel however, as the Construction Industry Federation reported a more than 30 per cent increase in house building activity.

Separately, Irish house buyers drew down €1.81 billion worth of mortgages during the fourth quarter of 2016, representing a year-on-year increase of 26.1 per cent, according the Banking & Payments Federation Ireland.