I have a six figure sum in a deposit account due to mature next month. The interest is very bad. It’s with Bank of Ireland and they want me to meet an adviser there about my options. Maybe a five-year term low risk. The money I got was from a house sale. I don’t really like the idea of risk. Any ideas, Post Office and so on? I don’t mind it being put away three to five years or so.
Mr JB, email
Answer:
Maturing investments are proving a right headache at the moment, especially for low risk investors.
You’ll have seen the news last week that Bank of Ireland is joining the growing trend by financial houses of charging customers for deposits. It is only major corporate customers – those with more than €10 million in the bank – that will have to pay, but even the idea that depositors are having to pay banks to hold (and use) their money tells a tale of a deeply dysfunctional market.
Essentially, it is proving next to impossible to make a decent return on cash at the moment, unless you are willing to take chances, and even then there’s no guarantee it will not go against you. For the banks, the option is to lodge the money with the European Central Bank, which is considered the safest way of ensuring they don’t lose anything.
This, however, runs counter to ECB policy, which is looking to encourage banks to invest in the real economy in an effort to improve the economic situation in Europe. When persuasion didn’t work, the ECB eventually brought the rate at which they accept deposits from the banks overnight down below zero. So the banks are paying the ECB to accept their money.
Where banks turn to the ECB for a “state guarantee”, individual consumers tend to turn to State savings , i.e. An Post. You may not make much on your money – from 0.33 per cent per annum on three-year savings bonds to 0.98 per cent on five and a half year savings certificates – but it is tax free and more than you make on basic term deposit with the banks.
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And while you can make a better return by investing in funds with Bank of Ireland or elsewhere, you will have to accept some level of risk. As a general rule, the higher the risk, the higher the potential returns – but that also comes with a higher risk of losing some or all of your money.
At least, with An Post – like the basic bank deposits – you’re backed by a State guarantee that you will get your money back.
The bad news for investors is that the outlook does not signal any easing in the harsh and volatile investment environment over the medium term; in fact, the post-Brexit turmoil, exacerbated by problems with the Chinese economy and uncertainty around the US presidential elections, mean choices are likely to remain difficult.
I was wondering what you think is coming up in the next budget? At present a house is tax free if you’ve inherited it while living in it for a few years, but I read that this is being reviewed. I’d just like your take on this.
Mr J.McJ, email
Answer:
At this remove, it is hard to have any clear sense of what will be in the budget in October, although there has been some fairly clear signalling of an intention to address/reduce the impact of the universal social charge. Ironic really, as it operates more cleanly and transparently than a lot of our tax system.
In any case, the two driving forces shaping the budget will be, first, the Government’s determination to be seen to share some of the benefits of the recovery – especially after the last election showed the presumption of a rising tide lifting all boats was not shared by the electorate. This might be mitigated somewhat by the second influence – the impact of the UK Brexit vote on the Irish economy and the exchequer.
One of the things that has been brought into the mix is the relief you’re talking about – dwelling house relief. I certainly did see some venting in certain media channels on the subject, much of it very exaggerated.
However, it is true to say that the number of families availing of the relief has jumped sharply, and there are concerns in Revenue circles that it is being abused – which it most likely is.
As usual, eagle-eyed tax specialists have been advising their often wealthy clients of the possibility of providing a home for children without any tax implications on. They have been surprisingly open on the subject of such “tax planning”.
Revenue has been clamping down recently on the practice of wealthy parents financially supporting the lifestyles of their adult children. Most recently in the 2014 Finance Act, it tightened up the rules for such support under section 82 of the Capital Acquisitions Tax Act 2003, covering the “support, maintenance and education” of children. The suspicion is that support no longer available under section 82 is now being redirected to dwelling house relief.
If they have strong grounds to suspect the tax exemption on dwelling houses is being similarly abused, I would expect them to push hard for reform.
Still, the relief is a valuable element of social policy to ensure that family members living with, and often caring for, elderly parents are not effectively forced into homelessness by inheritance tax charges on the death of those parents which forces them to sell the only home they know.
I think, as with the review of section 82, any reform will look to retain the relief for those people who have been genuinely living in the family home for the three years prior to any inheritance with an aged or infirm parent and who subsequently remain in the home (or replacement accommodation) for six years thereafter.
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Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or email dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice

Where can I get a risk-free return on a six-figure sum?


The Montrose Student Residence located beside the UCD campus at Stillorgan Road, Dublin 4, is expected to be of interest primarily to international investors when it goes for sale from today at a guide price of over €41.5 million.
The first purpose-built student accommodation of its kind to come on the market in Dublin will show an income yield of around 5.4 per cent after standard acquisition costs, according to Fergus O’Farrell of selling agents Savills. The gross rent roll is forecasted to reach €2.91 million per annum.
The Montrose is based on the former three-star hotel of the same name which has been converted at a reported cost of €22.5 million by a Scottish company, Ziggurat Student Living. It bought the hotel at the depths of the property crash in 2012.
The redeveloped 1960s building now has 205 ensuite bedrooms over five floors, including a two-bedroom penthouse, which are almost fully booked for the upcoming academic year. The 777sq m (8,363sq ft) on the ground floor have been let as complementary neighbourhood services including a Bank of Ireland branch, a Spar convenience store and a thriving Insomnia cafe. The grounds include 52 surface car-parking spaces.
Savills is forecasting that the student accommodation will bring in rental income of around €2.69 million. What Ziggurat describes as “classic” bedrooms are to be let at €245 per week, superior bedrooms at €275 and twin bedrooms at €300. The commercial units will account for a further €220,000 per annum, bringing the overall rent roll to €2.91 million.
Active market
Fergus O’Farrell said he expected that a very active student accommodation market in Dublin would evolve to compete with other commercial investment asset classes across Ireland as more sales come to the market over the next year or two.
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Marcus Roberts, head of student investment at Savills, said the chronic undersupply of purpose-built student accommodation, together with strong rental growth prospects and the prime location of the Montrose scheme beside UCD made it a “very attractive investment”.
UCD is the largest university in Ireland, with a student population of over 32,000. Savills says there are currently 90,000 purpose-built student bedrooms in Dublin including university-owned units and privately built stock. There are a number of large-scale student blocks currently under construction in the city.
Ziggurat has also bought a number of sites in Dublin’s north city centre as part of a €400 million Irish expansion plan after completing the Montrose project. The company has already announced plans to build several of its own developments including a 380-bed facility in Dublin’s north inner city; a 420-bed centre adjacent to the DIT Grangegorman campus and a 200-bed facility on Cork’s Western Road near UCC.

Montrose Student Residence beside UCD on sale at €41.5m


With 205 bedrooms, a Bank of Ireland and a Spar, these are no ordinary student digs


Fourteen passengers and two crew members were taken to hospital after a transatlantic jet encountered turbulence over the Atlantic on Wednesday morning.
United Airlines flight UA-880 made an emergency landing at Shannon shortly before 6am.
The Boeing 767-300 jet, with 207 passengers and crew of 13 on board, was flying from Houston in the US to London Heathrow.
The jet diverted and landed safely and was met at the terminal by ambulance paramedics.
A total of 14 passengers and two cabin crew were taken to University Hospital Limerick with minor injuries.
The airline has confirmed that it is providing care and support to customers and crew. A spokesman confirmed that the aircraft “experienced severe and unexpected turbulence. We wish these passengers and crew a quick recovery from their injuries.”

16 in hospital after jet makes emergency landing at Shannon


Houston-London flight experienced ‘severe and unexpected turbulence’


Retail sales rose 12.6 per cent in July compared to the previous month on the back of a huge jump in car sales, new figures show.
Sales were also up 6.3 per cent versus July 2015, the Central Statistics Office (CSO) data show.
However, once sales of motor cars are excluded, retail sales declined by 0.5 per cent from June to July and were up 2.7 per cent on an annual basis.
The figures show sales of vehicles rose 12.5 per cent last month, while furniture and lighting-related purchases increased 5.3 per cent. Sales of books, newspapers and stationary were up 2 per cent during July.
The biggest decline in retail sales occurred was in clothing, footwear and textiles, down 2.5 per cent.
The value of retail sales increased 4.5 per cent on a monthly basis and up 3.9 per cent versus July 2015. Once car sales are excluded, the value of sales dropped by 0.5 per cent on a monthly basis and was up 0.8 per cent versus the same month a year earlier.

Spike in car purchases leads to 12.6% hike in consumer spending


Retail sales down 0.5 per cent from June to July once motor sales are excluded


An almost fully occupied office and retail centre known as Swords Plaza along Main Street in Swords, Co Dublin, is expected to attract a range of Irish and overseas buyers when it goes on the market today at over €14.5 million through Cushman & Wakefield, previously known as DTZ Sherry FitzGerald.
The investment will show a net initial return of 10.34 per cent after acquisition costs of 4.46 per cent are taken into account.
The freehold complex extends to over 9,409sq m (101,285sq ft) and is producing an annual net operating income of €1,556,000. Around 69 per cent of the revenue is secured against a host of well known national/multinational occupiers including McDonald’s, Smiles Dental, Axa Insurance, ASL Aviation, DHL Express and Seetec Employment & Skills. ASL Aviation contributes €361,000, McDonald’s pays €160,000 while DHL Express contributes €142,000.
Occupancy levels
Occupancy levels in the high profile development are currently at over 97 per cent, according to the selling agent. The centre has a weighted average unexpired lease term of 7.94 years.
Swords Plaza occupies a pivotal location in the centre of Swords town, adjacent to both the Pavilions and Swords Central shopping centres. The plaza was originally developed in 1998 in conjunction with a residential apartment scheme. All the apartments with the exception of two in Archway House have been sold.
Of the building going for sale, 67 per cent is offices while 26 per cent is in retail use. The remaining 7 per cent comprises a double-level basement car park with 315 car spaces and two apartments.
Ciara Horgan of Cushman & Wakefield said Swords Plaza offered investors an opportunity to acquire a well-secured high-yielding commercial investment in one of Dublin’s most popular commuter towns.

Swords Plaza goes on market at over €14.5m


Fully occupied office and retail centre expected to attract range of Irish and overseas buyers


Brookwood, a popular Dublin steak and seafood restaurant set up by Mulberry Gardens owner Laura Peat and backed by the founders of private equity firm FL Partners, saw accumulated losses widen last year.
Newly filed abridged accounts for PNL Restaurants Limited, the owners of Brookwood, show accumulated losses increased from €172,774 to €232,522 for the 12 months ending December 2015.
The company, whose directors are named as accountant turned restaurateur Laura Peat, and FL Partners founders Neill Hughes and Peter Crowley, had cash at hand of €54,286 at the end of the year, up from €44,791.
It also had net assets of €42,478 as compared to assets of €102,226 a year earlier.
The restaurant employed 22 people with related costs, including wages and salaries, totalling €232,425.
Brookwood opened on Baggot Street in Dublin 2 in 2014.
Ms Peat previously set up Eatery 120 in Ranelagh and Mulberry Gardens in Donnybrook. Mr Crowley and Mr Hughes established FL Partners in 2006. Previous investments have included Racing Post, Sunseeker, UTV, Kaymed and ATA Group.

Losses widen at Dublin restaurant Brookwood


Restaurant run by Laura Peat and backed by founders of private equity firm FL Partners


The Irish Farmers’ Association (IFA) is facing substantial losses in income with several beef processors reporting a major fall-off in levy contributions in the wake of recent pay scandals.
The Irish Times has learned that farmers and cattle dealers who supply up to 50 per cent of the beef to Ireland’s largest processors have opted out of the levy, which part funds the farmers’ group.
This compares to an average opt-out rate of less than 20 per cent at the same firms a year ago. The companies, which did not want to be named, account for the majority of beef processing in Ireland.
The fall-off in farmers paying the levy in the dairy and mart sectors is not thought to be as large. Two big dairy processors said the decline in levy payments, which are deducted from all farm sales to co-ops, processors and marts, was not significant.
Levy
In March, the IFA reported a 12 per cent decline in revenue from the levy across all sectors not just beef, but nothing like the mass opt-out some had predicted in the wake of organisation’s high-profile pay debacle last year.
Larry Goodman’s ABP group, however, upped the ante last week by ceasing the automatic collection of the levy.
In response, the IFA accused the Goodman firm of sabotaging its funding and cancelled the ABP’s authorisation to collect the levy, effectively jettisoning up to €300,000 in contributions from ABP suppliers.
There is growing concern within the IFA that other processors may follow ABP’s lead in shifting the onus on farmers to contact processors if they want to pay.
About a third of the IFA’s €13 million annual income comes from the European Involvement Fund (EIF) levy, which was ostensibly set up to fund the group’s lobbying operation in Brussels.
Rumbling disquiet about how the levy is collected has ratcheted up since the IFA’s pay debacle last year.
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However, the fractious relationship between the beef industry and the IFA may also be factor in the variation in opt-out rates.
In 2014, the IFA organised blockades of meat factories in protest at what farmers claimed were low cattle prices and the significant variation between prices here and in the North.
The IFA also claims Mr Goodman’s move was motivated by the group’s opposition to ABP’s planned acquisition of 50 per cent of Slaney Meats. The claim is strongly denied by ABP.
Deal
The Slaney deal, if cleared by competition authorities, will give ABP control over a quarter of the beef processing sector in Ireland.
An IFA-commissioned report submitted to the competition authority is understood to suggest that the proposed Slaney deal is likely to weaken competition in the processing sector here by making co-ordinated effects in the relevant markets more likely.
IFA president Joe Healy said earlier this week that many farmers and processors had been in contact to express their support for the stance taken by the IFA.
The organisation is also facing a possible showdown with former general secretary Pat Smith, who is suing his former employer over a €2 million severance package agreed prior to his departure, which was subsequently withheld.

IFA funding threatened by fall-off in levies in beef sector


Levy payment is at centre of escalating row between Goodman firm and farmers’ group


On paper, Aberdeen is one of the UK’s richest cities, with only London having more millionaires per capita. House prices are well above the British average and expensive cars cruise down the city’s grey, granite streets.
But beneath the surface, Aberdeen’s long boom has come to a shuddering halt. The discovery of North Sea oil in the 1970s transformed this one-time fishing town on Scotland’s northeast coast. Now, with a barrel of crude retailing at under $50, the former “oil capital of Europe” is struggling.
The UK Government Expenditure and Revenue Scotland (GERS) figures from last Wednesday estimated that the takings from the North Sea fell from £9.6 billion in 2011-12 to just £60 million last year. An estimated 100,000 people have lost jobs in the lengthy oil and gas supply chain with more redundancies expected.
Paul Wheelhouse, the Scottish National Party (SNP) minister for business, innovation and energy, has said the Scottish economy faces “substantial challenges” as a result of lower oil prices.
Many of the upmarket restaurants that catered for the well-heeled oil and gas industry have shut their doors. Former customers now queue for packets of rice and fresh fruit at the plethora of food banks that have sprung up across the Granite City.
“You have a situation where white-collar workers are turning to food banks,” says Rick Brooks from the Trussell Trust food bank in Aberdeen. “People are basically giving away their cars because they cannot afford to run them.
“Two years ago you couldn’t find white-collar workers using a food bank; now 50 per cent of new users in the last six months are white-collar workers who were administrative staff or above.”
Global crash
The global oil crash, which was largely attributed to a price war being waged by Saudi Arabia against the US shale industry, has seen seen profits in the North Sea nosedive since 2014.
Although production remains high, exploration drilling is at levels last seen in the 1960s, before the North Sea was a major oil producer. Now “efficiency” is the watchword. Operating costs have dropped from more than $30 a barrel to almost half that but cannot compete with barely a dollar in Saudi Arabia.
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“The North Sea was high cost by international standards anyway,” says Alex Kemp, professor of petroleum economics at Aberdeen University. “At the current prices quite a lot of fields are showing losses.”
Kemp, a leading expert on the North Sea oil economy, predicts tough times ahead for the industry, at least in the short term.
“Our modelling is suggesting that the rest of the year will be quite tough and there could be more redundancies,” says Kemp. “The only bright spot is that [the North Sea] is very completive internationally.”
Cost reductions have largely come from massive cuts to once lucrative salaries. Falling wages have had a big impact on Aberdeen’s economy.
House prices, which rose by 17 per cent in 2013, have fallen sharply in the last year, according to a report from Aberdeen Solicitors’ Property Centre. The city’s population has declined by 15 per cent since the crash with the majority of students and young professionals in Aberdeen considering leaving the city in the next few years, according to a recent PwC report.
“We anticipated cuts and a pretty severe downturn, but I don’t think anyone anticipated what we are currently going through. I don’t know when we will come out of it,” says Jake Molloy, an organiser for the Rail Maritime and Transport (RMT) union. Offshore strikes, the first in more than 20 years, took place recently over pay and conditions.
“Morale is very low,” says Molloy, himself a veteran of the huge platforms that sit hundreds of miles off Aberdeen’s rugged coast. A bronze scale model of the Piper Alpha glints in the sun in the window of the RMT’s Aberdeen office: the rig was destroyed in an explosion that killed 167 people in 1988. Molloy says concerns about safety are growing as budgets are slashed.
Many oil companies are increasingly relying on cheaper foreign labour to service their offshore platforms.
“The oil companies have reduced costs but to do that they have brought in Filipino, Indian, Malaysian crews on around £2 an hour,” says Molloy. In the largely unregulated offshore world, these workers are not subject to minimal immigration restrictions.
Little hope
The downturn in the global oil economy has affected almost every aspect of life in Aberdeen. Hotel rooms were once so hard to come by that offshore workers were put up in Edinburgh , more than 100 miles away. Now, newly built hotels stand practically empty.
“What we are experiencing now is here to stay,” says Stewart Spence, owner of the five-star Marcliffe Hotel. “When we had $100 oil we had 100 per cent occupancy. Now we have $40, $50, we have 40, 50 per cent occupancy. That’s what we have to live with for the future.”
Earlier this year, New Yorker Stephen Dillon closed his steakhouse Prime Cuts after a decade in business. Midweek sales had fallen by about 70 per cent. Dillon and his French wife, Pascaline, opened a new barbecue restaurant but have little hope for the future.
“All of the fine dining establishments in Aberdeen have been hit really hard by the oil crisis,” says father-of two Dillon. “Last year cost me about £40,000. I was able to absorb that. Since January we’ve fallen off the plank.”
The UK’s recent Brexit vote has increased uncertainty for North Sea oil and gas – and for Aberdeen. The city has often looked to the EU and its near neighbour, Norway, says Barney Crockett, a councillor in the Labour administration that sits in Aberdeen’s 1960s-era city chambers.
“We often feel we don’t get a fair look from Scottish or British governments so Europe has been really important,” says Crockett, pointing to the city’s hydrogen bus fleet, which is part-funded by the EU. “Brexit means we need to work harder on our links with Europe.”
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The downturn in the North Sea could have political as well as economic implications. The Scottish National Party’s prospectus for independence in 2014 was based on prices more than $100 a barrel. With oil currently wholesaling for less than half that, the prospect of a second referendum appears to be receding, despite Scottish first minster Nicola Sturgeon saying another vote on leaving the UK was “highly likely”.
The immediate question in Aberdeen is how to turn the city’s fortunes around. “You can’t just abandon a city of 200,000 because even those people not working directly in oil and gas are affected. What else should politicians be tackling, if not this?” says Lynn Bennie, professor of politics at the University of Aberdeen.
Just a few feet from the city’s windswept docks, the Aberdeen Food Bank Partnership warehouse is filled with plastic bags stocked with dried food. Business has been brisk. By the end of 2015, chief executive Dave Simmers was dispensing about 750 food parcels a month. Now that figure is 1,200.
Many of those coming for help used to work in the North Sea, says Simmers.
“The downturn has had a dramatic impact across the social and economic fabric of the northeast and wider: it has had an impact right across Scotland and the UK.”

Hard times for Aberdeen as oil price slump hits home


The boom in the former ‘oil capital of Europe’ has come to a shuddering halt


Germany’s economy minister says free trade talks between the EU and the US have failed.
Negotiations on the so-called Transatlantic Trade and Investment Partnership (TTIP) have made little progress in recent years.
Sigmar Gabriel, who is also Germany’s vice chancellor, said that “in my opinion the negotiations with the United States have de facto failed, even though nobody is really admitting it”.
He noted that in 14 rounds of talks the two sides have not agreed on a single common chapter out of 27 being discussed.
Mr Gabriel compared the TTIP negotiations unfavourably with a free trade deal forged between the EU and Canada, which he said was fairer for all sides.
If reached, the deal could encompass almost half the global economy, potentially generating €92 billion in added output for the EU and US.

Talks on EU-US free trade deal have failed - German minister


Sigmar Gabriel says Transatlantic Trade and Investment Partnership has made little progress


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The message from the meetings in Jackson Hole was clear: there is no winding the clock back to the pre-crisis world of central banking as officials seek ways of improving their monetary weaponry.
The point was made by Janet Yellen, the Federal Reserve chair, in the speech that opened the Kansas City Fed’s annual symposium – a gathering of the central banking elite in Grand Teton National Park.
Fighting the next recession, she said, would be likely to involve the new tools that the Fed invoked during the financial crisis – not just rate cuts but also asset purchases and forward guidance. She also raised the prospect of further changes by future generations of policymakers, including changes to the central bank’s inflation target and purchases of alternative kinds of assets when it needs to do quantitative easing.
Interventions by fellow central bankers bore out that impression. Governor Haruhiko Kuroda of the Bank of Japan (BoJ) said he saw “ample space” for further loosening of the institution’s monetary policy, as he defended the central bank’s attempts to bolster growth and inflation via policies including negative rates.
The BoJ wrongfooted markets in January when it set a minus 0.1 per cent rate on some deposits that banks place at the central bank. Growth and inflation have disappointed since then.
Mr Kuroda said the BoJ’s easing efforts including negative interest rates amounted to an “extremely powerful” policy scheme, adding that the central bank would take further action without hesitation if it was necessary to achieve its price stability target.
Unwanted side-effects
Benoît Cœuré, a member of the European Central Bank’s executive board, told the conference that the unconventional measures being deployed by big central banks could come with unwanted side-effects.
Nevertheless, if other parts of governments did not do their part to bolster economies, the ECB “may need to dive deeper into our operational framework and strategy to do so,” he argued.
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Papers presented at the conference support the notion that central banking will remain in the brave new world it entered, after the crisis forced policymakers to rip up traditional templates.
On Saturday, for example, Jeremy Stein, a former governor of the Fed who is now at Harvard, presented an argument that the US central bank should maintain large balance sheet instead of allowing its holdings of assets to shrink radically back towards its pre-crisis profile.
He argued in a presentation that this would ensure that there was an ample supply of safe, government-provided short-term claims. This would compliment the Fed’s efforts to improve financial stability and reducing the tendency of private-sector financial companies to finance risky assets using large amounts of short-term debt.
The paper comes amid an intense debate within the Fed as to how far it should allow the $4.5 trillion balance sheet it amassed during quantitative easing shrink as it heads back to a supposedly more normal monetary policy.
The possibility of central banks holding vast quantities of debt on their balance sheets for a long time raises the risk of blurring the boundary between monetary and fiscal policy, raising new questions about central bank independence.
The previous day Marvin Goodfriend, a professor at Carnegie Mellon University, told policymakers they should be thinking of ways of pushing interest rates into even more negative territory in order to stimulate their economies.
The former Federal Reserve Bank of Richmond economist wrote back in 1999 that negative rates were a feasible option years before central banks started actually experimenting with them. Today the BoJ, ECB and several other European institutions have implemented negative rates to prop up growth and prevent deflation.
Challenges
However, the various means Mr Goodfriend proposed to permit more deeply negative rates would raise huge challenges. Among them is the outright abolition of cash to prevent retail depositors from taking money out of their accounts and hoarding it in their mattresses, or the creation of an electronic currency on which the authorities can set a positive or negative interest rate.
The notion of negative rates is apparently being viewed with scepticism by the Fed, as shown by Ms Yellen, who made no mention of negative rates in her discussion of future policy options.
The protracted period of ultra-low rates has already provoked deep concerns in the financial sector, including among pension funds and insurance companies, and has triggered worries that bank profits could be impaired. – (Copyright The Financial Times Limited 2016)

Central bankers to persist with brave new world


Fighting next US recession likely to involve using tools from crisis, says Fed chair Yellen


First-time buyers are expected to get a filip this October, with plans afoot for a new incentive type scheme which should help them get a first step on the property ladder.
The so-called “Help to Buy” scheme for first time-buyers (FTBs) will be outlined by Minister for Finance Michael Noonan on budget day, and should offer some form of monetary incentive for beleaguered home buyers stymied by restrictive mortgage lending rules and exorbitant rents.
The Help to Buy initiative is part of the Government’s overall housing strategy, which aims to increase the n umber of homes built per year to 25,000 by 2021, as well as providing 47,000 social housing units in the same period.
Previous efforts to incentivise first-timber buyers through Dirt free savings have failed to take off so will the Government strike the right note with its new plan? All will be revealed when Budget 2017 is announced, but here are some preliminary pointers:
1) It will be revealed on Budget day: Minister for Housing Simon Coveney has indicated that the new scheme will be revealed on Budget day, October 11th 2016.
2) It could be worth up to €10,000 per couple: In its manifesto, Fianna Fail previously proposed a type of Special Saving Incentive Account (SSIA) scheme, which would see the Government give people €50 for every €200 they saved towards a mortgage deposit. The incentive would be capped at €5,000 for a single buyer and €10,000 for couples. However, while the Government’s scheme is thought to be of a similar order, it’s understood to work around a tax rebate scheme. This means that rather than incentivise people to save for a deposit for a property, the Government will give you money back once you purchase, something akin to the Home Renovation Incentive scheme, which gives you 13.5 per cent VAT refund on new kitchens/extensions etc . The new scheme could however, be a combination of the two. The UK’s Help to Buy shceme for example, gives those saving for a home a 25 per cent reward on savings of up to £3,000, so a maximum reward of £750. However, while the scheme was originally understood to be introduced to help those saving for a deposit, it now appears that the reward can only be used
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3) It will be backdated to July 19th. Announcing the scheme on July 19th, Minister for Housing Simon Coveney said that any incentive will be backdated to this date, which should reassure FTBs who are hoping to buy before the Budget. However, it is not yet clear what this date actually means - ie does it apply to property buyers who go sale agreed after this date? Or does it apply to mortgage drawdowns? This could potentially exclude FTBs who bought a property in June, and drew it down in August.
4) The scheme may be limited to particular homes: Conal MacCoille, economist with Davy Stockbrokers, notes that the scheme may be limited to homes under a certain value and/or new build properties only. Given that the scheme is to be introduced to “incentivise the construction of more starter homes”, the latter could make sense, while a cap on values is pretty much a certainty. As Mr Coveney said when launching his housing plan in July, “We’re not in the business of supporting the purchase of mansions.”
5) It could push up house prices: If, as is expected, the rebate is as much as € 10,000 for a couple, when this is set against an average mortgage loan of € 197,000 for the second quarter of this year the rebate “could push up house prices significantly” Mr MacCoille says. The aforementioned Help to Buy scheme in the UK for example, is said to have added an average £8,250 to the cost of a home.
6) It’s for first-time buyers only: Under Revenue rules, a FTB is someone who has never - either jointly or individually - purchased or built their own house in Ireland or abroad. FTBs must intend to live in the property, and can’t earn rent on the property (for the first 5 years) apart from letting a room under the rent-a-room scheme. If the Government applies this understanding of a FTB to its new scheme, it means that if your partner previously purchased a property and you now hope to buy one together, you won’t be entitled to avail of the scheme. Moreover, if you’re a returning emigrant and previously purchased a property abroad, you won’t be considered as a FTB either. And if you leave the country or move to another property and rent out the entire property within the first five years, you may face a claw-back of any incentive you received.
7) It’s part of a review of mortgage lending limits: The Department of FInance is working on the scheme in conjunction with the Central Bank, as part of its review of its mortgage lending limits. Whether or not this means changes to the mortgage lending review remains to be seen however.
8) Mortgage insurance may be part of the scheme: In its housing plan, “Rebuilding Ireland”, the Government noted that the goal of Help to Buy is to provide “affordable mortgage finance or mortgage insurance” for FTBs. Mortgage insurance is a way of allowing homeowners borrow more than the 80 per cent or so of purchase price allowed under the Central Bank’s new rules, as some of the mortgage risk is transferredfrom lenders to insurers. However last year a senior economist with the Central Bank expressed concern about the potential cost of mortgage insurance, warning that it could “act counter” to the regulator’s lending rules.

Will new first-time buyers package hit home? What we know so far


Proposed ‘Help-to-Buy’ scheme which could offer incentive of up to €10,000 may exclude returning emigrants who have previously bought property abroad


Irish property group Chartered Land has appointed Galway-based JJ Rhatigan & Company as the main contractor for its high-end residential scheme on the site of the former Berkeley Court hotel in Ballsbridge.
The appointment followed a competitive tendering process for the multimillion-euro project. Site preparation works are currently under way, with initial construction work on the basement car park due to begin in September.
Pavilion-style development
Chartered Land, which is controlled by founder and executive chairman Joe O’Reilly, plans to build about 200 exclusive apartments in a pavilion-style development on Lansdowne Road.
The apartments are expected to come to market in the spring of 2017 with more than 500 jobs to be created during the construction phase.
The mature boundary trees and iron railings along Lansdowne Road, which date back to the mid-1800s, are being retained as part of the scheme.
The site was the Trinity College botanical garden from 1806 until the 1960s when the Jurys (now the Ballsbridge Hotel) and the Berkeley Court hotels were developed.
Planning modifications
Chartered Land is developing the site in accordance with the 10-year master planning permission granted in 2011. A number of recent planning modifications have been made to make the development more efficient but the overall height and mass of the scheme as originally granted remains intact.
Commenting on the appointment, Chartered Land’s chief executive Andrew Gunne said: “We look forward to working with JJ Rhatigan & Company in delivering a residential development to an international premium standard that befits this unique Ballsbridge site.”
Founded in 1999, Chartered Land is one of the largest property development and investment companies in Ireland.
The company, which has exited the National Asset Management Agency, has developed close to two million square feet of space. Its developments include the Dundrum Town Centre, the Bord Gáis Energy Theatre and Grand Canal Square office scheme in Dublin’s docklands, the Swords Pavilions retail centre, and a mixed-use retail led development on South King Street in central Dublin.
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Other projects include the completion and repositioning of Elm Park campus on 17.3 acres in Dublin 4 in partnership with Starwood Capital Group.
Established in 1952, JJ Rhatigan is a leading Irish building contractor, with offices in Dublin, London, Galway, Sligo and Cork.
Its projects include Heuston South Quarter in Dublin, NUI Galway’s IT building, phase two of the Crumlin hospital redevelopment, the Radisson SAS hotel on Golden Lane in central Dublin, the Athlone Town Centre and, in Galway, the Bon Secours expansion.
The contractor has also worked on a number of recent residential developments in Dublin, including the Grange, Wyckham Point in Dundrum, and St Edmunds near Liffey Valley in the west of the city.
Project Trinity
Known as Project Trinity, the overall 6.8-acre site in Ballsbridge has planning permission for 490 apartments, 152-bedroom hotel, retail, a cafe, bar and restaurant.
The first phase involved the demolition of the Berkeley Court, with development of the Ballsbridge Hotel to come at a later date.
The site was originally acquired by Carlow developer Seán Dunne for about €400 million at the height of the property boom.
Chartered Land partnered with the Abu Dhabi sovereign wealth fund to acquire the site from Ulster Bank last year.

Galway firm hired as contractor for Dublin 4 residential scheme


Chartered Land appoints JJ Rhatigan for scheme on site of former Berkeley Court


Whether it’s the back-to-school panic that is invading many homes, the “Monday fear” following a weekend of excess or the crippling anxiety that forces you under your duvet for days on end, many people have found themselves on the scale of anxiousness at one stage in their lives.
More and more, thanks to our increasingly frantic and demanding lifestyles – not to mention our dependence on technology and all things digital – anxiety is no longer just something we feel momentarily before we give a presentation or go for an interview. For many, it’s an affliction that presents itself on a daily basis and, frustratingly, it requires long-term management. There are support services available and anyone suffering from anxiety should speak to their GP about options.
There are also practical ways to help to ease your anxiety.
Step 1: Understanding It’s doubtful that you’d think to read up on anxiety and all of its nastiness until you’ve actually experienced a panic attack or two. However, not understanding what anxiety is, why it’s happening or how to handle it, can often worsen the experience when it first presents itself. It’s the not knowing what’s going on that, for many sufferers, is the most unnerving.
Having an idea of your body’s inner workings on a very simple, physical level will not only be a relief to the part of your mind that questions whether or not you are having a heart attack but knowing that your body is merely working too hard to protect itself will be somewhat reassuring, and thus reduce the symptoms.
Simply put, though our lifestyles have evolved hugely since our cavemen days of hunting animals for dinner, our biochemistry has not. Our fight or flight response was essential for our survival back then; without it, we wouldn’t have experienced the fear necessary to drive us away from danger and keep us alive.
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These days, though we no longer face the same threats to our survival – unless of course you still chase down wildebeest for your Sunday roast – that very same warning system is still consistently stimulated by the everyday stressors we face.
Understanding that your body is trying to warn you that perhaps it’s time to take your foot off the gas is the first step to coping with and overcoming anxiety.
Step 2: Assess your current situation Okay. By now you understand what anxiety is and you have a newfound respect for your body and the ways in which it tries to protect you. Now you need to assess precisely why your body’s internal alarm system is ringing.
Maybe you’re working yourself to exhaustion at work, have had something on every evening and, in between that, you’ve had pretty hectic weekends.
Something awful doesn’t have to have happened in your life to justify a more intense bout of anxiety. In this incredibly common case, you’re running on empty and your body wants you to take a breather, but chances are you didn’t listen to the first warning or two. Or maybe you’re stuck in a toxic work environment that goes against your own core values; your conscious mind may want to keep the head down and plough through for money’s sake but your more intuitive subconscious is telling you to get the hell out of there for the sake of your mental health. If your eyes are wide open, this part’s usually easy to conquer.
Step 3: Acceptance This is where it gets tricky. You know why you’re feeling anxious and you now face an internal conflict wherein you naturally try to run away from it and, as a consequence, you feel it more.
Your body does everything in its power to resist and stop the anxiety; understandably so as it’s a truly crap experience. Stop what you’re doing and accept it. Accept that anxiety is something that every single one of us is managing; some just feel it worse than others.
Accept that it’s not a permanent thing. Most importantly, if you’ve had a really bad bout, stop looking at your anxiety as something to be cured and never experienced again. Instead, accept that you’re human, that it’s normal, that it’s understandable and that it’s something we will all feel at certain points in our lives, but know that you’ll get really good at dealing with it.
Step 4: Understand the negativity bias This is a very basic flaw of the human condition and, to go back to our cavemen days once more, it too is all about survival. Our brains are programmed to focus on the negative: We receive 100 compliments and just one insult but it’ll be that one negative that we focus on. We’ll hear and worry about that one unfortunate person who died of an obscure illness and ignore the thousands who didn’t.
Sound familiar? This is both nature (how our brains work) and nurture (just watch the news and you’ll see how society has been conditioned to focus on the negative). You may have experienced one particularly anxious day and one day without a care in the world, but thanks to the negativity bias, it will be the former, negative experience of anxiety that will have a greater effect on our psychological state, rather than the latter. Understanding this helps you take a step back and consciously bring your attention to the positive. A gratitude diary – where you list the positives in your life on a daily basis – will help to correct this imbalance.
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Step 5: Mindfulness You feel anxious, somebody tells you to try “mindfulness”, you try it and . . . nothing. Yep, we’ve been there. You’re impatient, you want to feel better now not next week, and you just can’t see what all of the fuss is about. The good news is you’re not alone in this struggle, but, mindfulness, as a tool in your arsenal against stress and anxiety, is overwhelmingly backed by science. What’s more, it’s a skill that takes considerable time to develop and requires daily practise. Apps such as calm.com and Headspace make it a whole lot easier to find your inner Zen. Stick with it; the “om” will come.
Step 6: Diet There have been countless tomes written on this step alone – your diet can wreak havoc on your state of mind – but for an instant and noticeable effect, go caffeine free. If you’re already in an anxious state, your body is over-stimulated, caffeine will serve only to exacerbate it. Ease off the sugar too and give your body a chance to reset.
Step 7: CBT Cognitive behavioural therapy, where you work with a therapist to alter the behaviours and beliefs that are fuelling your anxiety and/or depression, is one of the most practical and positive approaches you can take. It’s very scientific, with plenty of real-life exercises that help you break the vicious cycle of anxiety. Rather than talk therapy, where you can often find yourself talking in circles, this is a measured and hugely (and scientifically) supported method of intervention.
Step 8: Stop comparing yourself to others This sounds easy but, again, it’s quite the skill to acquire. We’re all guilty of comparing ourselves to those around us. “He’s doing better than me in work.” “She takes on so much more than I do.” “He has absolutely no fear when it comes to public speaking and I’d sooner eat my own skin than willingly get up on that podium.” And so on and so forth. Comparing yourself to others is usually more of a hindrance than a help. For some, it’s motivation, for others, it’s a weapon to use upon themselves that – you guessed it – fuels anxiety. Focus on yourself. A) You’re doing your best and b) chances are they’re feeling it too.
Step 9: Make it work for you If you look at things from a positive perspective, you’ll soon realise how that same anxiety that you’ve long considered as your own worst enemy is actually one of your most useful allies too. You feel anxious because you care, you’ll naturally be concerned about doing a good job and will be a lot more motivated than the person who’s never felt it. What’s more, several studies have shown that those who experience heightened anxiety are often more intelligent and more creative than those who do not. Winning.
Step 10: Prioritise the things that give you joy An important, final step. Don’t force yourself to do things that you just don’t like or be someone you’re not because you think it’s “just your anxiety” holding you back. There’s a fine line between managing your anxiety or conquering your fears and doing things that just don’t sit right with you. If you hate the thought of slumming it at a festival and you really prefer to sleep in a mud-free zone, don’t beat yourself up about it. Trying to suit other people instead of yourself will only give you stress. Find out what you like and do more of it and, most of all, know the difference between your anxiety and that which defines you; your own personality.
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How to recognise anxiety
Everyone experiences anxiety in different ways. You may experience the following:
Difficulty concentrating. A sense of feeling constantly on edge.
Physical symptoms such as headaches, butterflies in your stomach, sweaty hands, high blood pressure, dizziness, breathing heavily, feeling faint, sweating.
You may be smoking or drinking more than usual.
You are eating too much or not eating enough.
You are fidgety or rushing around nervously.
You might also feel run down, tired, have problems concentrating or problems sleeping at night.
You might feel worried all the time.
You feel overwhelmed or panicked about even little things.
You spend a lot of time thinking and often overthink things.
Source: SpunOut.ie, Ireland’s youth information website created by young people, for young people.
Some good reading: Mind Over Mood, Dennis Greenberger; The Lifechanging Magic of not Giving a F*ck, Sarah Knight; The Rules of Life, Richard Templar; Rising Strong, Brene Brown; Thinking Fast & Slow, Daniel Kahneman; Flourishing, Maureen Gaffney; Thrive, Arianna Huffington; The Power of Now, Eckhart Tolle.


Anxiety presents itself to many on a daily basis but support services are there, as are measures to reduce it


Once a staple of the British high street, BHS closed its doors for good yesterday, ending 88 years of British retail history.
The last bargain hunters could be seen emerging from the retailer’s Walthamstow branch in north London clutching heavily discounted items as administrators shut 22 stores across the UK, the last of more than 150 branches.
The department’s only overseas store was on O’Connell Street in Dublin, a space now occupied by Penneys. However, the shop fell victim to recession and was closed in the 1980s.
Heatons later took up the Irish franchise, opening three outlets in Kilkenny, Letterkenny and Dublin’s Jervis Centre under the British chain’s name. But in 1998 all three were changed to Heatons shops.
In the UK, Duff & Phelps and FRP Advisory have already overseen 141 closures over recent weeks, including BHS’s flagship Oxford Street store in London’s West End.
Parliamentary inquiry
The department store’s collapse in April has affected 11,000 jobs, 22,000 pensions, sparked a lengthy parliamentary inquiry and left its high-profile former owners potentially facing a criminal investigation.
Retail billionaire Sir Philip Green has borne the brunt of the public fallout, having been branded the “unacceptable face of capitalism” by furious MPs.
Green owned BHS for 15 years before selling it to serial bankrupt Dominic Chappell for £1 in 2015.
Green has come under fire for taking more than £400 million in dividends from the chain, leaving it with a £571 million pension deficit and for selling it to a man with no retail experience.
Veteran Labour MP Frank Field has asked the serious-fraud office to launch a formal investigation into the pair to ascertain if any criminal wrongdoing occurred during the sale of the chain and throughout their respective ownerships.
It has also emerged that Mr Field is investigating Green’s Arcadia retail empire, which includes Topshop.
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Discounted goods
In Walthamstow, shoppers rummaged through boxes of heavily discounted goods, with discarded items strewn across the floor.
Paul Campbell, who lives locally, left the store shortly after 4pm with a trolley full of DVDs. He said: “I’ve paid a pound for this lot. I reckon it’s about 200 or so DVDs, if they are all there in the right cases.
“There are some Rugby World Cup box sets, golf DVDs which I’ll give to my mate, the rest I will sell or give to the local charity shops. “At the end of the day, I’ve paid a pound for all this. It’s not really much of a risk.”
Veedoo Clash, from Tottenham, said she was sad to see BHS leave the high street, having shopped at the branch for 28 years. She said: “I just grabbed whatever I could.
“I went to Oxford Street when it closed, I bought lots of things for my husband and the grandchild, but I hid them because I didn’t want my husband to see. Then I came here to Walthamstow.” – (Additional reporting by PA)

BHS exits British high street after 88 years


Administrators shut final 22 shops across UK in chain that had more than 150 outlets


Life and pensions administrator Se2 said on Tuesday it will double the workforce at its new Waterford operations to 135 employees over the next three-four years.
The US company has an existing fulltime team of 70 and hope to fill out its 135 seat office space over the coming years, and opened its new Waterford offices today, in what is an “important milestone” for the company, chief executive Gautam Thakkar said.
“ This is a sign of our continued commitment to the region, which is an important hub for our global service delivery model, and we are excited about this investment in our business.”
Se2 supports services more than 1,000 life and annuity products for more than 20 clients, and has approximately $100 billion in assets under administration.
Janet Dulohery, VP and head of human resources with Se2 said that the company is still interested in “hearing from ambitious people, who are similarly enthused about making a real impact on the US life and pension industry.”
The announcement is the latest jobs win for the region. Earlier this year healthcare company OPKO said it will create 200 highly skilled jobs over the next five years through the expansion of its EirGen Pharma facility in Westside Business Park in Waterford.

Se2 to double jobs at new Waterford operation over 3-4 years


New office is an ‘important milestone’ for company CEO says


A substantial town centre site in Tullamore, Co Offaly, with obvious development potential has come on the market through Cushman & Wakefield and Sherry FitzGerald Lewis Hamill. The joint agents are guiding €1.8million for the 4.32 hectares (10.66 acres) which are to be sold on the instructions of receivers Michael Madden and Michael Coyle of HWBC Allsop.
The lands are partially occupied by a detached car showroom extending to 945sq m (10,167sq ft). The remainder of the site was recently cleared of a number of warehouse buildings and is on the northern side of Church Road immediately west of Tullamore Shopping Centre which is anchored by Dunnes Stores.
The site has town centre zoning under the local development plan which has been extended to 2020 and favours a mixed use development.
In 2009 planning approval was granted for a mixed-use development of 29,229sq m (314,619sq ft|) ranging in height from three to six storeys over basement. The planning permission was extended to 2014 and, according to the selling agents, a lower density scheme may now be favoured by the various interests.


Site has town centre zoning under development plan which has been extended to 2020


Anheuser-Busch expects to cut about 3 per cent of its enlarged workforce in the three years after its takeover of SABMiller as it seeks to maximise savings from the combination of the world’s largest brewers.
The reductions will be implemented gradually and in phases, the companies said in documents related to the acquisition published Friday.
About 5,500 positions are likely to be eliminated, according to a person with direct knowledge of the matter, who asked not to be identified because the information is private.
The job cuts will form part of the $1.4 billion of annual savings that Anheuser-Busch has said it’s seeking from the takeover, equivalent to almost a tenth of SABMiller’s $15 billion in annual revenue.
Brewers of mass-market beer are trying to cut production and distribution costs as they lose market share to smaller independent brands in Europe and North America.
SABMiller last year doubled its own savings target to $1.05 billion by 2020.
The level of savings that AB InBev is seeking from its combination with SABMiller is less than in some previous deals.
It achieved cost reductions representing about 16 per cent of sales when it bought both Anheuser-Busch Cos. in 2008 and Mexico’s Modelo in 2013.”
AB InBev is known for running their breweries very efficiently and their front-of-office very efficiently,” Javier Gonzalez Lastra, an analyst at Berenberg, said by phone.
“They will do the same as they did at Modelo, where they found that the job that was being done at AB InBev by two people was being done by four.”
AB InBev shares rose 0.6 per cent to 112.50 at 11:56 am in Brussels.
The world’s largest brewer said the estimate for job cuts doesn’t include areas such as sales, where it hasn’t made advanced plans for integration due to regulatory restrictions.
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The company said SABMiller’s head office will be integrated into its headquarters in Leuven, Belgium, and management office in New York.
– (Bloomberg)

Anheuser-Busch to cut 5,500 jobs after SABMiller takeover


Job cuts will form part of the $1.4 billion of annual savings Anheuser-Busch is seeking


Euro-area economic confidence worsened more than analysts predicted in August in a sign that the reverberations of Britain’s decision to leave the European Union may finally be reaching companies and households.
An index of industry and consumer confidence fell to 103.5 from a revised 104.5, the European Commission in Brussels said on Tuesday. That compares with a median estimate of 104.1 in a Bloomberg survey of economists, and follows an unexpected increase in July.
With European Central Bank president Mario Draghi leaving it largely to economic data to fine-tune policy expectations before next week’s Governing Council meeting, the release provides a case for more stimulus to sustain the recovery and revive inflation. The International Monetary Fund has already cut its forecast for euro-area growth next year on the back of the UK’s Brexit vote, and the ECB will release new projections next week.
“The weakness in the August reading is broad-based across all countries, with some exceptions, and across sectors,” said Frederik Ducrozet, an economist at Banque Pictet and Cie SA in Geneva. “It’s another reason to be cautious and dovish for the ECB. Maybe not in the next weeks, but in the next months.”
August Weakness
Inflation in the currency bloc probably accelerated to 0.3 per cent in August from 0.2 per cent the month before, leaving it well below the ECB’s goal of just under 2 per cent, according to a separate survey. Eurostat will release preliminary figures on Wednesday, along with jobless data that is expected to show the unemployment rate dropped to 10 per cent in July.
Sentiment in the industrial sector fell to minus 4.4 from minus 2.6, the lowest level in 18 months, according to Commission data. Confidence also slipped in services, retailing and among consumers, while a gauge for construction rose to an 8-year high.
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Figures showed last week that confidence also subsided in the region’s two largest economies. Germany’s business climate as measured by Munich-based research institute Ifo unexpectedly declined the most in more than four years. Sentiment slipped in France, the nation’s statistics institute said.

Euro-area economic confidence hit by Brexit effect


August weakness may be down to decision of Britain to leave EU


When I was at university I spent a summer travelling around Europe with some friends, and one of them suggested we drop in on his parents’ place in the south of France.
There are two things I remember about that visit. There was the mortification of being greeted by a butler who ceremoniously carried my tatty luggage – a few things stuffed into a plastic bag – to the suite of rooms I’d been allocated. But what stays in my mind even more was the image of his father – who turned out to be a famous tycoon – clad in small swimming trunks with cigar clamped between teeth, holding a gin and tonic in one hand and a telephone receiver in the other.
The year was 1979 and this was what power looked like. The man was too important to be out of touch with the deals he was doing. So he had installed a telephone line by the swimming pool and passed his summers issuing instructions from a lounger by the water.
A quarter of a century later, technology allowed all of us to pretend to be tycoons. We might not have had the butler or the pool house but everyone could head to the beach with a BlackBerry packed along with their towels. And because we could, we did. Only for most of us, what we were doing was not deals, it was responding to mundane inquiries that could have waited two weeks – or forever.
This year, I decided to do something radical that I hadn’t done for almost a decade. I took a proper holiday. I disconnected myself from work altogether. I didn’t open any work messages. I spent time reading, walking, looking at the sea – and sometimes getting into it – while I thought about not much at all.
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Immersion in work
When I returned to work and reacquainted myself with email, it was perfectly straightforward. I deleted almost all of them unread, responding only to the things that looked interesting. Far from feeling overwhelmed, I felt a certain excitement in the sudden immersion in work. It was a new-shoes and sharp-pencil sort of feeling that used to go with the beginning of a school term.
Over the past week it has started to dawn on me that my radical action was not radical at all. I was merely following the latest fashion.
Last week I sent an email to an entrepreneur I know, and within seconds the automatic reply came back: “I am on holiday until August 30 and will not be checking messages.” This was particularly remarkable given that last time I’d seen him – some five years ago – he had told me how he expected all his employees to respond to messages instantly wherever they were and whatever they were doing.
So I emailed back asking what had made him change his mind – but all I got in return was the same automatic message telling me he wasn’t reading whatever I was sending.
The very next day I got an email from a woman who I had contacted before I went away. It began: “Sorry for my radio silence – I have had a blissful two-week holiday and am just catching up on emails on my return.” Here was the same thing again: a driven, thirtysomething entrepreneur who wanted me to know not how hard she worked on holiday but how she loafed around, and how much she enjoyed it.
Experiment
To see how widespread this change is, I’ve done a little experiment. I’ve collected all the out-of-office emails I’ve had this summer, and counted the number that were followed at once by an email sent from the beach. Three years ago, it was very unusual for an automatic message not to be quickly followed by a real one. This year I’ve had a total of 38 automatic messages telling me the sender was away, only six of which have been succeeded by a personal, poolside reply.
Bragging about not working on holiday seems to be part of a wider trend - which I wrote about a few months ago – in which fashionable execs flaunt not their long hours, but their short ones. To be emailing from the pool does not prove you are powerful, it is starting to be seen for what it is – a sign of weakness, poor time management and an inability to delegate. If you can take two weeks off altogether it shows you have overcome all gadget addiction, and like a modern-day tycoon can control when you work – and when you don’t. – (Copyright The Financial Times Limited 2016)

Lucy Kellaway: Poolside working no longer a sign of importance


Bragging about not toiling on holiday part of wider trend of shorter working hours


Ryanair boss Michael O’Leary has weighed into the tax dispute between Apple and the EU, saying the Government should write a letter to the EU telling them to “f**k off”.
Dubbing the EU’s ruling “bizarre”, the outspoken airline chief said: “One of the fundamental principles of the European Union is that each country has its autonomy to make its own tax decisions.
“Frankly the Irish Government should turn around - they shouldn’t even appeal the decision - they should just write a letter to Europe and tell them politely to f**k off.
“The idea that you have the state aid mob - who’ve had more court verdicts overturned than any other department in Europe in the last 20 years - come along 10 years after the fact and say, ‘no we didn’t like that, we think you should have done something else’, is frankly bizarre.”
On Tuesday, Europe’s antitrust commissioner Margrethe Vestager slapped the maker of iPads and iPhones with a €13 billion tax bill.
She claimed Apple paid just 1 per cent tax on its European profits in 2003 and 0.005 per cent in 2014, and said its arrangement with the Irish government is illegal under state aid rules.
Apple is set to challenge the decision, and Mr O’ Leary added: “I think there’s no chance of this surviving a court ruling in Europe. There’s certain things that Europe has no competence in.”
Mr O’Leary went on to claim that Ryanair was “one of the most compliant taxpayers in Ireland”, having paid a tax rate of about 11.9 per cent on profits last year.
On Brexit, the chief executive, who backed the Remain campaign during the EU referendum, expects the UK to suffer “significant economic damage” as a result of its decision to quit the single-bloc. However, he added that it is too soon to revise the company’s financial guidance.
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In July, Ryanair said it would “pivot” growth away from UK airports and instead focus on hubs in the European Union following the Brexit referendum result. The firm said its growth rate in the UK is expected to slow from about 15 per cent to 6 per cent next year.
However, with long-term growth in mind, Mr O’Leary is now calling on the UK Government to approve three new runways in a bid to end Britain’s airport capacity conundrum for “the next 50 years”.
He urged Theresa May’s government in Britain to be “radical in its decision making” and rubber-stamp new runways at Heathrow, Gatwick and Stansted airports. The proposal would mean ending the battle between Gatwick and Heathrow for a new runway.
“Ryanair calls on the new UK Government to be radical in its decision making on new runways for London instead of picking just one (Heathrow or Gatwick) and calls on prime minister Theresa May to approve three new runways — one each at Heathrow, Gatwick and Stansted, which will finally resolve the runway capacity issue for the next 50 years, while ensuring competition between airports delivers efficient facilities and prevents airlines and passengers being ripped off by gold-plated monopoly runways,” he said.
Last year, the Government’s Airports Commission said a third runway at Heathrow is the best route to expanding airport capacity. David Cameron stalled on backing the recommendation, saying the Government required more time to assess the environmental impact.
A decision is now expected before the end of the year. Mr O’Leary said that expanding only one airport would allow airlines to justify raising prices for customers, who might subsequently help foot the bill.
But competition between three airports would be a boon for travellers and benefit Ryanair long-term, he claimed. “We’ll have more capacity to grow, fares will fall and in a declining fare environment, we’ll win,” Mr O’Leary said. Mr
O’ Leary made the announcement as he trumpeted new routes to Strasbourg and Faro and more flights to Sofia and Nuremberg from Stansted, Gatwick and Luton airports.
He also warned Ryanair may reduce its full-year profit guidance if a drop in ticket prices accelerates. “We’re not yet revising the guidance,” chief executive Michael O’Leary said to reporters Wednesday in London.
“But we’re very cautious on the full-year guidance. If winter fares fall by more than 10 or 12 per cent, we will have to review.”
The carrier said last week it’s seeing fares in its core summer period fall by 9 per cent, sharper than the 6 per cent to 8 per cent dip expected at the start of the budget airline’s fiscal year.
After the comments, Ryanair shares fell as much as 2.5 per cent and were down 1.6 per cent on Wednesday morning.
PA

Apple tax: Government should tell EU to ‘f**k off’, says Ryanair’s O’Leary


Outspoken airline boss weighs into row between firm and Brussels


The final details of the European Commission’s decision on Apple is full of complexity and obscure points of tax and competition law. But the essence of this is simple.
The European Commission is arguing that the profits which Apple earned outside the US between the years 2004 and 2014 should have been taxed in Ireland. The Revenue Commissions here had decided – on the basis, Ireland says, of international practice – that Apple should pay corporation tax in Ireland only relating to what it sold in the Irish market.
The difference between these two numbers is very large – some €13 billion on the European Commission estimates – and hence the demands from the commission that the Government collects this amount in tax.
The scale of the finding means that the whole issue of multinational tax will be front and centre again in international business debate, and this is bound to spark off serious tensions between the European Commission and the US, which will be furious at what has happened.
Ireland is caught right in the middle. It is a decision which will involve significant collateral damage for Ireland, which has always claimed to have a transparent and legally based tax system. The Revenue is merely meant to apply the rules in collecting tax here.
Rules
The European Commission has found that it offered Apple a “selective advantage” by the way it applied the rules to the US multinational – in other words it gave it too generous a deal, and one which was not on offer to other companies.
The Government and the Revenue strongly deny this and Ireland will take the fight to the European courts. However the scale and high profile of the judgement means Ireland – and the IDA – will have a fight on their hands.
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It remains to be seen if the European Commission now targets other Irish-based companies. And while the Irish tax system has changed in recent years, the decision will inevitably now create some uncertainty about the tax structure on offer to inward investors, even if the Government will loudly argue that this is not the case.
The amount of money involved will put the Government on the defensive, both at home and internationally. However the Government says it “profoundly” disagrees with the decision and a Cabinet meeting will be held on Wednesday at which Minister for Finance, Michael Noonan will seek approval to appeal the case to the European courts. Apple, now a party to the case after the decision has been reached, is also expected to appeal.
Apple established its European headquarters in Ireland in the early 1980s and for many years paid no tax on sales outside Ireland under the old export sales relief rule.
This was abolished on April 5thj, 1990, to be replaced by the 10 per cent corporation tax rate, since raised to 12.5 per cent. And so Apple entered into talks with the Revenue about how tax would be applied to its operations here, culminating in a so-called tax ruling, a non-binding letter given by the Revenue outlining the principles it would use to tax Apple here.
It is here that the dispute lies. The Government says Apple did not get a special deal. The commission disagrees and holds that the two tax rulings - one in 1991 and one in 2007 – represents illegal state aid from the country to the company. The demand that Ireland collect the tax involved follows as the legal remedy to recoup this “illegal” aid to Apple.
Case
Ireland’s case will be that it offered Apple no favourable deal and that the European Commission has taken an extraordinary use of state aid rules without any proper legal basis. The view in Dublin is that this is something of a power grab by the Commission, which has seen the OECD emerge as the main international body in the tax arena.
The Department of Finance also believes that the commission has moved away from taxing economic activity where the “ substance” of it takes place - as favoured by the OECD. It points out that much of the money moving through Apple’s Irish subsidiaries related to products such as the iPhone, on which key research and development work was undertaken in the US, and sales of which were greatest in big European markets. The commission was, Ireland will contend, operating on the basis that “if it is not taxed elsewhere, it should be taxed in Ireland.”
The commission’s ruling will now be for the European courts to decide, though Irish officials say it goes against established international tax practice.Ireland has also moved to change some of the tax structures in question.
Apple used the double Irish structure – with a company registered here but not tax resident in Ireland. In fact one of its key companies – as a US Senate hearing discovered – was not tax resident anywhere. A change in Irish tax rules means this loophole allowing the registering of a company here with no tax residency anywhere has been closed.
And the whole double Irish structure is being phased out by 2020. In hindsight it was the right move to make these changes in 2014, but it will not stop Ireland being the butt of huge international criticism.
Ireland’s case will be that it collected all the tax which Apple declared and was due here – and it was not its job to police its worldwide structures. The commission argues that the Irish Revenue authorities, influenced by jobs in Ireland, gave Apple a favourable deal.
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Law
A lot of this comes down to complex tax law on transfer pricing - the way big companies allocate costs between their subsidiaries, vital in the case of Apple where a huge intellectual property or IP charge was levied on sales across Europe, pulling money back into Irish registered subsidiaries.
Ireland will now be forced to raise a tax demand on Apple and the money will, as Father Ted put in, be “resting in our account” – or some kind of escrow half way house – as the case wends its way through the European courts. With Apple also certain to appeal, Irish officials say that “the idea that we could ever get our hands on this cash could be seen as fanciful.” This will not stop a huge political debate at home.
However such is the scale of the money involved that this is bound to have significant political implications internationally, too.
The US reaction will be furious – and retaliatory measures may be threatened – and Ireland’s competitors for foreign direct investment elsewhere in Europe will make hay.
This one will run and run.

Analysis: Ireland now caught in multinational tax row


Cliff Taylor unravels the complexities and consequences of the European Commission’s ruling


In a further sign of the recovery in values on Dublin’s Georgian squares, Colliers International has secured just over €2.8 million for 26 Fitzwilliam Square, well above the €2.35 million guide price.
The house is on the south side of the square, and is in immaculate condition. It has a floor area of 418sq m (4,500sq ft) and six car spaces to the rear. However, the sale did not include a mews building which is held under separate ownership.
The house is let to tenants including Adare Cosmetics and Grafton Recruitment at an overall rent of €92,000. The net initial yield will be only 3.1 per cent.
Michelle McGarry of Colliers said the sale price of €625 per sq ft underlined the increasing values in the Georgian market and the higher demand for these properties.
Last December Colliers sold the vacant 40 Fitzwilliam Square for €2.1 million, equating to €507 per sq ft. A year earlier the same agency got €2.45 million for number 43 – the equivalent of €570 per sq ft– with the benefit of a potential mews site. Both properties were bought by international investors.
With the property market in the doldrums in 2012, 10 Fitzwilliam Square was sold for a mere €950,000, reflecting a capital value of only €257 per sq ft.
Ms McGarry says the much improved demand for the houses since then has come from domestic and international cash buyers as well as others looking to reconvert them to residential use.

Georgian on Fitzwilliam Square sells for €2.8m


Colliers says sale price of €625 per sq ft underlines increasing values in the Georgian market


1 The Government will be obliged to issue a tax bill to Apple. However, the certainty of an appeal means the money is likely to be put into some kind of escrow account – in other words it will not be ours to use – until legal appeals are over. Given also that the European Commission decision questions whether all the €13 billion is actually due to Ireland – saying other European countries or even the US might stake a claim – it is unclear whether Ireland will ever see some, or all, of the cash.
2 The Government points out that under EU budget rules it could not use a one-off windfall – if one does eventually appear – to fund day to day spending or tax cuts. It would have to go to pay down the national debt, which now stands at €200 billion. A decent chunk off the debt would, of course, reduce the debt and the annual interest bill. However, the Government says that it has to act to defend Ireland’s reputation as a place for FDI investment and appeal the decision.
The Apple tax ruling The EC issued a ruling on August 30th in relation to the tax arrangements of Apple in Ireland, where it has its European HQ. The EC said Apple had been granted selective treatment by Ireland through two tax rulings in 1991 and 2007. The EC has ordered Ireland to recover up to €13 billion from the tech giant. Minister for Finance Michael Noonan indicated Ireland would appeal the decision "to defend the integrity of our tax system; to provide tax certainty to business; and to challenge the encroachment of EU state aid rules into the sovereign member state competence of taxation”. Q&A: Cliff Taylor answers the key questions I found this helpful Yes No
3 The European Commission investigation was specifically into the affairs of Apple. There is no investigation under way into other Irish companies. The one concession to Ireland in the commission’s press statement is a sentence saying “this decision does not call into question Ireland’s general tax system or its corporate tax rate.” It is likely that other US companies both here and in other European countries had similar, though possibly not identical, structures. It remains to be seen if the commission has other targets in the years ahead, though Irish sources do not believe it currently has other Irish companies in its sights.
4 There appears to be no chance of any negotiated settlement here. If the amount demanded by the European Commission was much smaller, some sources feel there might have been attempts to sort out some agreement. Now, however, this will not happen. This will go right through the European courts system.
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5 The Government and IDA argue this will have no impact on future foreign direct investment. The European Commission statement that it is not targeting our general tax system will provide some support. However, it remains to be seen what impact this has on overall US investment in Europe and in Ireland, and if US companies will be tempted to pull back from operations here if they feel they are being targeted by officialdom.

Apple tax judgment: Five key points on EU ruling


Back taxes of €13bn not available until appeals end and EU dictates may only be used to cut debt


The EU Commission is preparing to issue a final ruling that Ireland’s tax deal with Apple represented illegal state aid.
However sources believe the amount of tax Ireland will be asked to collect from the US giant will be much less than the billions of euro which had been originally suggested by some analysts.
Court challenge
The Government and Apple will immediately signal that they will challenge the ruling in the European courts, a process that could take some years. Sources say that government and the US company remain in “lock step” on the issue.
When the EU Commission issued its preliminary adverse finding in 2014, which was that it believed that the Irish government had given Apple illegal state aid, some estimates were that it would seek to oblige Ireland to collect as much as €18 billion to €19 billion in taxes dating backing to the 1990s.
Smaller sum
Sources now believe the likely outcome will involve a much smaller sum. While the precise terms of the EU Commission decision - and whether it will mention an actual figure - remain unclear, sources believe that the sum involved is likely to be in the hundreds of millions rather than the billions. One suggestion is that Ireland could be pressed to recoup somewhere between €500 million and €1 billion from Apple. However the final terms of the commission decision are not yet fully clear.
While this amount of money would not be significant for Apple, both it and the Irish government are believed certain to appeal any ruling. Both Apple and the Government have denied any wrongdoing.
Earlier this year the EU Competition Commissioner, Margrethe Vestager, told the Minister for Finance, Michael Noonan, that the decision could come in September or October. Sources now believe it may emerge late next week or early the following week.
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White paper
The Apple case has become a highly controversial issue between the EU Commission and Washington. Earlier this week, the US Treasury published a White Paper arguing that the EU Commission was exceeding its powers in its tax investigations.
In what was seen as a clear reference to the Apple case, it also made a strong argument that the EU Commission should not seek to recoup back tax dating back years from the companies involved.
Apple is just one of a number of companies whose tax affairs the Commission is investigating, but it is by far the most high profile of the cases involved.
An adverse ruling is likely to heighten tensions between Brussels and Washington. The white paper suggested that the treasury was considering retaliatory measures, and also that the tax disputes could have a “chilling” impact on any trans-Atlantic investment.
The Irish government has repeatedly insisted that Apple did not get any “special” date, but the low level of tax paid by Apple of profits moved through Ireland - often 2 per cent or less - has proved highly controversial.

EU to rule against Ireland in Apple tax case


Tax deal found to be illegal state aid but Apple’s tax bill to Ireland will be far less than originally suggested


Unemployment was unchanged at 8.3 per cent in August, according to the latest official figures.
The State’s headline rate of unemployment was recently revised up from 7.8 per cent to 8.3 per cent to take account of changes to the labour force.
Nonetheles, the August figures show the number of workers classified as unemployed fell by 1,700 to 181,600 on a monthly basis.
This equated to an annual decrease of 15,400 or 0.8 per cent.
The figures also showed that youth unemployment stood at 17.1 per cent. At the height of the financial crisis in 2012, the jobless rate among 15-24 year olds in the Republic reached 31.3 per cent.
A breakdown of the numbers shows the unemployment for men was 9.5 per cent in August, down from 10.6 per cent a year, while the jobless rate for women was 6.8 per cent, down from 7.4 per cent 12 months ago.
The seasonally adjusted number of males unemployed in August was 113,600, a decrease of 600 on the previous month.
The seasonally adjusted number of females unemployed was 68,000, a decrease of 1,100 when compared to July.


Latest monthly figures reflect revisions made in recent Quarterly National Household Survey


The company behind a renewable energy project launched last year by Taoiseach Enda Kenny has been granted High Court protection from its creditors.
The court on Monday appointed Michael McAteer of Grant Thornton as interim examiner to Mayo Renewable Power, which plans to build a wood-chip burning electricity generator at Killala at a cost of €180 million.
Mayo Renewable Power’s plans ran into financial difficulty in recent weeks and this was compounded when a company that had been hoping to supply the Irish plant with fuel sued its promoter for $60 million in a New Jersey court in the United States.
In May, British bank, Barclays, one of three lenders that were originally meant to contribute €118 million to the project, pulled out as a result of the uncertainty surrounding the UK vote to leave the European Union.
Neither it, nor the project’s other lenders, AIB and Ulster Bank, have provided any finance. Mayo Renewable’s lead backer, Irish American businessman’s Gerald C Crotty’s Weichert Enterprises has spent €90 million on the development, €10 million more than it originally planned, through its parent, US-registered Rockland Mayo LLC.
Mr Kenny laid its foundation stone last October but the project ran into a number of difficulties and building was suspended last month.
One of the problems was with sourcing a boiler, a key component. The banks’ consent to a change of supplier was required, and this delayed funding.
The High Court heard that builder John Sisk & Son is the main contractor and there are 130 sub-contractors and suppliers. The construction company has sought €17.5 million for work done.
If the court confirms Mr McAteer’s appointment when the case is returned on September 12th, he will have up to three months to come up with a rescue plan for the company.
Creditors will not be able to enforce debts against the business during that time, although it is open to the examiner to pay suppliers if he believes it is in the company’s best interest.
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At the High Court on Monday afternoon, Mr Justice Tony O’Connor said that he was satisfied to appoint Mr McAteer of Grant Thornton as interim examiner to Mayo Renewable Power Ltd after being informed that the company has a reasonable prospect of survival as a going concern if certain steps are taken.
These include the examiner helping to securing additional investment that would allow the plant to be built. He said that nine potential investors have expressed in the venture from some nine major investors.
The examiner would also put together a scheme of arrangement with creditors, which if approved by the High Court, would allow the company to continue trading.
Mayo Renewable Power’s lawyer, James Doherty SC, told the court that an independent experts report said in the event of it being wound up the deficit would be more than €100 million. On a going concern basis, that shortfall was a little over €200,000.
The company intends to initially import fuel from north America, but ultimately plans to buy it from Irish suppliers. It will employ 130 people when it is up and running.

Court appoints interim examiner to Mayo Renewable Power


Firm behind Kenny energy project has reasonable prospect of survival, court hears


PotashCorp of Saskatchewan, the world’s largest potash supplier, and its rival Agrium are in talks to combine in a deal that could create a near-$30 billion (€27bn) fertiliser giant.
The move comes a year after PotashCorp failed to acquire Germany’s K+S and as the Canadian company continues its efforts to consolidate an industry marred by falling commodity and equity prices.
Although the structure and terms of the deal were unknown, those briefed about the deal said the transaction would be a merger of equals, which suggests that the combination is likely to be all in stock.
‘No decision’
In a short statement PotashCorp warned that “no decision has been made as to whether to proceed with such a combination, no agreement has been reached, and there can be no assurance that any transaction will result from these discussions”.
Shares in PotashCorp, dual-listed in New York and Toronto, were up more than 13 per cent after Bloomberg reported the talks, giving the company a market capitalisation of about $15 billion. Agrium’s stock rose 7 per cent, giving the group an equity value of about $13 billion.
News about a possible deal also lifted the share prices of rival fertiliser producers, such as Mosaic and Intrepid Potash, as a deal might lead to further consolidation in the sector.
Fertiliser companies including PotashCorp and Agrium are struggling with industry overcapacity, although some producers hope a series of mine closures and suspensions over recent years will stabilise the industry.
– (Copyright The Financial Times Limited 2016)

PotashCorp and Agrium in talks to combine and create fertiliser giant


Merger of world’s biggest potash supplier with rival would result in $30bn business


Most Asian share markets tumbled on Monday while the US dollar added to gains made after Federal Reserve chair Janet Yellen indicated a US interest rate increase remains on the cards for this year.
European markets also looked set for a weak start, with financial spreadbetters expecting Germany’s Dax to open down 0.7 per cent, and the blue-chip Euro Stoxx 50 to begin the day 0.6 per cent lower. British markets are closed for a holiday. MSCI’s broadest index of Asia-Pacific shares outside Japan extended losses to 1 per cent.
Japan’s Nikkei bucked the trend, closing 2.3 per cent higher, the biggest one-day gain in three weeks, as the yen weakened against the resurgent dollar. China’s CSI 300 index and the Shanghai Composite slipped 0.2 per cent. Hong Kong’s Hang Seng shed 0.4 per cent.
The case for a US rate hike has strengthened in recent months, with a lot of new jobs being created, and economic growth looks likely to continue at a moderate pace, Yellen said in a speech at the Fed’s annual monetary policy conference in Jackson Hole, Wyoming, on Friday. While Yellen did not give guidance on what the central bank needs to see before raising rates, she said the Fed already thinks it is close to meeting its goals of maximum employment and stable prices. The odds of a hike in September rose to 33 per cent following the comments, from 21 per cent on Thursday, according to CME Group’s FedWatch tool. Traders were pricing in a 59.1 per cent chance of a hike in December, up from 51.8 per cent on Thursday.
Uncertainty
“While the move towards another Fed rate hike will likely cause bouts of consternation in investment markets I don’t see the same degree of uncertainty that we saw around last year’s Fed rate hike,” Shane Oliver, head of investment strategy at AMP Capital in Sydney, wrote in a note. “It’s clear from the Fed’s actions this year that it is aware of global risks, the impact of its own actions on those risks and any potential blow back to the US economy and of the impact of a rising US dollar in doing some of its work for it.”
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The comments from Yellen and Fischer dragged Wall Street lower at the close. But they proved a boon for the US currency, with the dollar index, which tracks the greenback against six global peers, jumping 0.8 per cent on Friday. It held steady at 95.552 on Monday. The dollar rose 0.5 per cent to a two-week high of 102.34 yen on Monday. That followed gains of 1.3 per cent on Friday, its biggest one-day advance in almost seven weeks.
Stimulus
Japanese household spending and retail sales data for July are due on Tuesday. Investors are seeking some sign that Prime Minister Shinzo Abe’s massive stimulus programmes are having an effect, after figures on Friday showed a decline in consumer prices by the most in three years in July.
The euro was flat at $1.120 after tumbling 0.8 per cent on Friday, its biggest one-day slide since July 15th. In commodities, crude prices retreated on the rally in the dollar and concerns about growing output after exports from Iraq in August exceeded July levels. Iran also said late last week that it would only co-operate in upcoming producer talks in September if other exporters recognised Tehran’s right to regain market share lost during international sanctions that were only lifted in January. US crude futures dropped 1.5 per cent to $46.95. Global benchmark Brent crude retreated 1.2 per cent to $49.31. The stronger dollar also weighed on gold. Spot gold slipped 0.2 per cent to $1,318.10, after earlier touching a five-week low.
Reuters

Asian share markets tumble on Federal Reserve’s rate comments


Dollar gains made after Fed’s Janet Yellen indicated a US interest rate increase remains on the cards


Germany’s economy minister says free-trade talks between the European Union and the United States have failed.
Negotiations on the Transatlantic Trade and Investment Partnership (TTIP) have made little progress in recent years.
Sigmar Gabriel, who is also Germany’s vice-chancellor, said: “In my opinion the negotiations with the United States have de facto failed, even though nobody is really admitting it.”
He noted that in 14 rounds of talks the two sides had not agreed on a single common chapter out of 27 being discussed.
Mr Gabriel compared the TTIP negotiations unfavourably with a free-trade deal forged between the EU and Canada, which he said was fairer for all sides.
If reached, the deal could encompass almost half the global economy, potentially generating €92 billion in added output for the EU and US.

EU-US free-trade talks have failed, says German minister


Little progress on Transatlantic Trade and Investment Partnership, says minister


The case for raising US interest rates in the US has strengthened in recent months because of improvements in the labour market and expectations for moderate economic growth, Federal Reserve chair Janet Yellen said on Friday.
Ms Yellen did not indicate when the US central bank might raise rates, but her comments reinforced the view that such a move could come later this year. The Fed has policy meetings scheduled in September, November and December. Speaking at a three-day international gathering of central bankers in Jackson Hole, Wyoming, Ms Yellen said the “US economy was nearing the Federal Reserve’s statutory goals of maximum employment and price stability.”
“In light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months,” Ms Yellen said in prepared remarks.
She added that the Fed still thinks future rate increases should be “gradual.” The Fed raised rates in December, its first hike in nearly a decade, but it has held off further increases so far this year due to a global growth slowdown, financial market volatility and generally tepid US inflation data.
Investors currently see an 18 per cent probability the Fed will raise rates at its September policy meeting and a 53 per cent chance of an increase in December, according to CME Group’s FedWatch tool.
Ms Yellen’s comments, by failing to lay out a clear roadmap for what the Fed needs to see to raise rates, will likely not convince some investors that a rate increase is imminent, in part because Fed policymakers are seen as sharply divided over whether to increase rates soon or take a more cautious approach.
Ms Yellen was speaking on Friday at a Fed conference on designing new monetary policy frameworks, with central bankers eager to find new ways to stimulate economies even after they have cut rates to near zero and flooded banks with money.
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She devoted much of her speech to outlining how the Fed may deal with future recessions now that many economists and Fed officials believe that an aging population and other dynamics appear to be slowing US economic growth over the long term. Because slower growth means future US interest rates will likely also need to be lower on average, some analysts have suggested that the Fed will have less room to fight future recessions because there will be less room to cut rates.
Such a view is “exaggerated,” Ms Yellen said, because the Fed will be able to use bond purchases and forward guidance to ease conditions. It may also want to explore other options, including broadening the range of assets it can purchase, raising the inflation target, or targeting nominal GDP, she said.
Reuters

Yellen comments reinforce expectations of US rate hike


Fed boss says case for raising rates bolstered by improving labour market conditions