May pleads with MPs to stay the course as key Brexit vote looms

Business Week: also in the news were the US-Sino trade war, banks and the economy

UK prime minister Theresa May this week pleaded with MPs to “hold their nerve” and back her Brexit deal or face the prospect that the “only certainty would be uncertainty”.

May, who is facing her greatest test as prime minister, did not mince her words as she opened five days of debate on the withdrawal agreement in the House of Commons.

“No backstop means no deal,” she said. “Don’t let anyone here think that there is a better deal to be won by shouting louder. And do not imagine that if we vote this down a different deal is going to miraculously appear. The alternative is uncertainty and risk.

“The risk Brexit could be stopped. The risk we could crash out with no deal. The only certainty would be uncertainty: bad for our economy and bad for our standing in the world.”


But her words appear certain to be in vain. Legal advice from the attorney general this week warned that the UK could become bogged down in “protracted and repeated rounds of negotiations” if it tries to exit the backstop.

The advice was nothing new, but hardline Brexiteers nonetheless seized upon it. DUP MPs lined up against May, claiming it “vindicated” its opposition to the backstop, and that it was “devastating” for May.

Earlier, the advocate general of the European Court of Justice published its own legal opinion arguing that Britain could unilaterally halt Brexit by revoking its notice to leave the EU under article 50.

But, if the worst happens and the UK crashes out of the bloc without a deal, Ireland could face food shortages and a 7 per cent drop in gross domestic product, according to leaked British government papers.

The Irish Fiscal Advisory Council, which is the Government's budgetary watchdog, also warned that a cliff-edge Brexit next March was likely to have a disproportionately larger impact on Ireland than on other countries.

According to the Central Statistics Office, the impact of Brexit is likely to hit importers more than exporters, with new figures showing the UK was Republic's biggest import market in 2017.

The figures show the UK accounted for 24 per cent or €19 billion worth of food, fuel and other merchandise imported into the State last year. This was nearly €3 billion more than the value of Irish exports to the UK.

Meanwhile, Bank of America Merrill Lynch has relocated its main EU banking arm and up to 100 staff from London to Dublin four months ahead of the Brexit deadline.

International spat sends markets crashing

US president Donald Trump and his Chinese counterpart Xi Jinping reached a temporary truce in their trade war at a meeting over dinner at the G20 last weekend, but rising tensions amid the arrest of a Chinese businesswoman in Canada sent markets tumbling.

The world’s two biggest economies are trying to thrash out a deal, setting a 90-day deadline for the talks. While Trump declared himself to be a “tariff man”, Beijing adopted a more diplomatic approach, hailing the “very successful” progress.

However, the shock arrest of Meng Wanzhou, daughter of Chinese tech giant Huawei’s founder, at the request of the US as she boarded a plane in Canada, rocked global stock markets and wiped €2.5 billion off Irish stocks.

The Iseq Index fell 3.11 per cent, while a 2.5 per cent drop in the US S&P 500 saw the benchmark index erase its gains for the year. The Nasdaq weakened 1.9 per cent, and the Dow Jones Industrial Average shed 2.7 per cent, before closing down 0.3 per cent.

“The stock market is signalling a recession is on the horizon, a recession that is man-made, with two back-to-back trading days of heavy losses that has sent investors running for the exits,” said Chris Rupkey, an analyst at MUFG.

Just as well then that the Government is on course to run a budget surplus this year for the first time in over a decade following a near record €2.7 billion corporation tax take in November.

Exchequer returns for the first 11 months of the year show the business tax generated half a billion euro more than expected last month, and has now taken in a record €9.4 billion so far this year, 20 per cent ahead of the Government’s target.

Figures from the Central Statistics Office showed the amount of money the Government generates in tax has jumped by nearly 60 per cent in the past 15 years, but VAT generates less than it did at the height of the boom more than a decade ago.

Bankers among worst paid

They're unlikely to get much sympathy from the average member of the public, but it emerged this week that the chief executives of AIB and Permanent TSB are among the lowest-paid bankers in Europe.

An analysis of remuneration among 20 banks of similar size by The Irish Times showed Permanent TSB's chief executive Jeremy Masding received the lowest, at €499,000, just €1,000 behind Marco Morelli, who heads Banca Monte dei Paschi di Siena in Italy.

AIB chief executive Bernard Byrne earns a salary of €500,000, with total remuneration climbing to €600,000.

Separately, the organisation which controls €1.3 billion worth of Permanent TSB (PTSB) loans declined to disclose the ultimate owner of the portfolio because it has signed a non-disclosure agreement with the investor.

Pepper Finance, under questioning at an Oireachtas committee, said there would be "legal consequences" if it made any disclosure.

Over at Bank of Ireland, the management of workers’ pension schemes with a shortfall of €477 million is to be transferred to advisers Willis Towers Watson in a move affecting close to 30 jobs at the lender.

Finally, a new OECD report found that people remain slow to trust pension promises. Low investment returns on pension savings, less stable employment structures, low economic growth and the fact that people are living longer have all eroded belief that pensions “will deliver on their promises once workers reach retirement age”.

Colin Gleeson

Colin Gleeson

Colin Gleeson is an Irish Times reporter