No biker gangs after Brexit as UK rules out ‘Mad Max’ dystopia

Business Week: also in the news were housing roadblocks, Philip Lane, and the banks

UK Brexit secretary David Davis this week ruled out a "Mad Max-style" dystopia in Britain after it leaves the EU, dashing hopes Theresa May, Boris Johnson, and Jacob Rees-Mogg could form a marauding biker gang after exiting the bloc.

What a relief.

Davis was speaking in Vienna where he sought to reassure a business audience that there would be no “race to the bottom” in terms of regulatory standards with some Conservative backbenchers calling for a bonfire of EU regulations.

Some Europeans, he said, "fear Brexit could lead to an Anglo-Saxon race to the bottom with Britain plunged into a Mad Max-style world borrowed from dystopian fiction", referencing the 1979 movie where the world descends into war, famine and financial chaos after the oil runs out.


“These fears about a race to the bottom are based on nothing, not history, not intention, nor interest,” he said. “But while I profoundly disagree with them – it does remind us all that we must provide reassurance.”

Davis’s now preferred “Canada plus plus plus” model laid the basis for a fragile compromise at Theresa May’s Brexit “war cabinet” in a marathon eight-hour session on Thursday.

Mad Max or not, Britain will still be left to pick up the pieces. The UK government was told on Thursday that extending the transition period after Brexit would expose it to £5 billion of new EU contributions without any say about how the money was spent.

House of Commons’ European scrutiny committee chairman Bill Cash said that moving beyond the 21-month period preferred by the EU would pull Britain into the next seven-year budget cycle and require it to top up its recently agreed divorce settlement.

In the Republic, there were calls by lobby group Food Drink Ireland for a series of exemptions from EU state aid rules for our €12 billion food and drink industry in the event of a hard Brexit.

Under EU state aid rules, EU governments can only intervene in cases of clear market failure. However, there are provisions within the rules for the use of state aid to remedy a “serious disturbance” to the economy of a member state.

However, Davis, in his Vienna speech, said the rules should continue to apply in both Britain and the EU to ensure fair competition after Brexit.

In terms of the North, Minister for Agriculture Michael Creed said Border checks might still be required to maintain regulatory standards even if the UK and the EU reach a Brexit agreement for Ireland on customs and tariffs.

Cairn Homes’s water woes

The process of bridging the chasm between the supply of and demand for housing has been beset by roadblocks – and one more was revealed this week in Maynooth, Co Kildare, where a development by Cairn Homes is stalled.

The firm, the State’s largest housebuilder, is planning a large-scale development of more than 400 homes but that could be jeopardised by Irish Water’s lack of supply capacity.

The semi-state utility told Cairn there was supply capacity for just 40 homes on the Mariavilla site. The two parties are, however, close to an agreement that would see Cairn contribute part of the costs involved in laying about 2km of water mains to the site.

Cairn has nonetheless warned Minister for Finance Paschal Donohoe that, of its 30 sites, the company is “not in a position to build on 19 of these as of now”.

The correspondence, revealed in The Irish Times, cited difficulties and delays in getting local area plans approved or altered and specifically mentioned the cases of Clonburris, Brennanstown Road and Cherrywood in Dublin.

Meanwhile, a report from peer-to-peer lender Initiative Ireland said at least 40,000 homes will have to be built this year to satisfy demand. It forecast a need for 480,000 new homes across the State by 2031, with an average of 34,000 a year.

Staying with housing, "deep concern" was expressed by campaigners this week about the fate of 4,000 tenants in investment properties being sold as part of a multibillion-euro sale of non-performing mortgages by Permanent TSB.

The portfolio contains some 18,000 mortgaged properties, of which 4,000 are buy-to-lets, valued at €1 billion. Campaigners called on the Government to ensure the bank, which is 75 per cent State-owned, gets assurances as to how customers will be treated.

Not only does that seem a fanciful prospect, there have even been suggestions the bank will refuse to appear before the Oireachtas finance committee to address the matter.

Philip Lane should keep his passport within arm’s reach

There was disappointment in Dublin as it emerged Central Bank governor Philip Lane won't be packing his bags and heading off to the green pastures of the European Central Bank (ECB) after all.

Lane was withdrawn as a candidate for the vice-presidency of the bank by Minister for Finance Paschal Donohoe once it appeared certain his bid for a place on the six-member executive board was doomed.

The Spanish candidate, economy minister Luis de Guindos, won widespread support among EU finance ministers, and – despite high regard in several quarters for Lane’s candidacy – Donohoe felt it was important that there be consensus.

That being said, Lane should keep his passport within arm’s reach as he’s been widely tipped for the position of chief economist at the bank, a job that’s due to come up when Peter Praet leaves his position next year.

In the meantime, it is back to business as usual for Lane, casting his eye over the Irish financial system, which, it emerged separately, is to lose a significant player when RaboDirect Ireland quits the Irish market in May.

The online savings bank owned by the Dutch lender Rabobank has moved to "simplify its business model and reduce costs". Rabo's Irish operation has up to 90,000 customer accounts with a total of €3 billion on deposit. The move affects about 30 staff.

Elsewhere, profits at KBC Bank Ireland’s profits fell almost a fifth last year and Ulster Bank reported a €151 million operating loss as both struggled to contain costs relating to the tracker-mortgage crisis.

Over at Bank of Ireland, former Paddy Power chief executive Patrick Kennedy has emerged as the clear favourite to become the bank's next chairman after Archie Kane announced he was to step down later this year.