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Thursday Newspaper Review - Irish Business News and International Stories - - September 04, 2014
By Finfacts Team
Sep 4, 2014 - 11:29 AM
Pay cuts for Irish Rail staff will be suspended until workers decide whether to accept a plan giving trade unions a role in shaping the company's future.
The deal struck at the Labour Relations Commission (LRC) means that workers will play a key role in addressing finances in the transport company, with formal meetings to be held every three months with the National Transport Authority (NTA) and Department of Transport.
It will also allow pay cuts ranging from 1.7pc to 6pc to be reduced if additional savings are identified and delivered.
Trade unions said the deal addressed all of their concerns which led to two days of strike action earlier this month, and was the "best deal possible".
THE European Central Bank is set to launch a €40bn gamble to get credit flowing in the flagging eurozone economy.
The move will directly benefit Ireland, which has begun to show signs of recovery but is being hampered by insipid economic growth across the other 17 countries that use the euro.
The hope is that money pumped into the eurozone economy will trickle down into under-pressure households here.
ECB boss Mario Draghi is expected to outline plans to inject as much as €40bn into the flagging economy.
According to US investment bank JP Morgan Chase, he plans to buy bundles of bank loans which would be paid for by effectively creating money.
Brendan Keenan: The shopping list gets longer by the day. Like some demented male in a supermarket, the government keeps snatching goodies off the shelf and chucking them in the trolley marked "Budget 2015."
Recent reports suggest it has even begun to demonstrate that most unfortunate of supermarket behaviours, putting things back on the shelf, in this case children's tax credits, and replacing them with something else.
Missing is any suggestion of what the bill will be on October 15. There is a distinct impression that it is already more than can be afforded, especially in the longer run. Even more noticeable by its absence is any idea of what sort of dinner this hotchpotch of ingredients is supposed to create.
The Bank of Japan maintained its massive monetary stimulus and suggested the sales tax should rise again to help government finances, despite market doubts over the strength of the economy and the central bank’s ability to hits its inflation target.
The central bank cut its assessment on housing investment and warned that factory output remained weak, a nod to pessimists on its board who fret that a rebound in the economy after a severe second-quarter contraction may be quite modest.
A recent run of weak Japanese data, including a slump in household spending and tepid factory output growth in July, has cast doubt on the BOJ’s view that the economy will pick up steadily after the pain inflicted by a first sales tax rise in April.
The UK economy has been much stronger since 2008 than previously thought, the Office for National Statistics revealed yesterday as it tore up the previous official version of events.
With a shallower recession in 2008-09 and more rapid recovery since, the UK’s overall performance compares favourably with other G7 countries and eliminates a significant element of the recent concern over weak productivity.
The revisions – which include data up to the end of 2012 – will add to the dilemma facing the Bank of England as it prepares to set interest rates this week.
Ireland, one of the few remaining countries without postcodes, is to get them next year. But the unusual format chosen for them, in a long-running Department of Communications project managed by consultants Bearing Point, remains controversial.
Critics say the opportunity has been missed to use Ireland’s clean-slate status to produce a technologically innovative postcode system that would be at the cutting edge globally; similar to the competitive leap that was provided when the State switched to a digital phone network in the 1980s, well ahead of most of the world.
Instead, say organisations such as the Freight Transport Association of Ireland (FTAI), the proposed seven-digit format of scrambled letters and numbers is almost useless for a business sector that should most benefit from a proper postcode system: transport and delivery companies, from international giants like FedEx and UPS down to local courier, delivery and service supplier firms.
The Government needs only a €200m budget adjustment to reach the 3% fiscal deficit target agreed with the troika which gives it scope to introduce tax cuts and an increase in investment, according to Ibec Cork.
The Cork division of the employers’ group wants a €300m cut in income taxes; a €100m cut in consumption taxes; and the abolition of the pension levy.
“Increase the entry point to the marginal tax rate from €32,800 to €34,800; reduce the marginal tax rate from 52% to 51%; reform the universal social charge so self-employed and PAYE workers are treated the same; reverse recent alcohol excise increases and drop the unfair pensions levy, as had been promised,” it said in a statement.
Euro Topics: ECB bond-buying would be detrimental: At the meeting of the ECB's governing board today, Thursday, the guardians of the single currency will decide whether to buy government bonds to prevent stagnation and deflation in the Eurozone. This so-called quantitative easing would only aggravate the crisis, Michael Heise, chief economist of the Allianz Group, argues in the liberal daily the Financial Times: "First, the recent low inflation rates are in part a result of the decline in oil and other commodity prices. They also reflect necessary adjustments in the eurozone periphery - wage moderation and the impact of structural reforms are feeding through into lower prices across the board, which is exactly what countries such as Greece and Portugal need to restore competitiveness and bolster purchasing power. There is no sign of a vicious circle of falling inflation expectations and consumer restraint. Inflation rates will gradually climb again as the economy recovers."
France's debts growing: France's government must present it's budget for 2015 by September 12. In view of its complacency as regards implementing reforms and austerity measures it stands less and less chance of meeting the deficit to GDP ratio of three percent, the liberal French business paper Les Echos warns: "The deficit stagnated this year and will no doubt still stand at around four percent of GDP in 2015. And looking ahead, it will hardly sink below the three percent level before 2017 - unless new austerity measures are introduced, an option the government has excluded. So indebtedness will no doubt continue to rise until the end of the president's current five-year mandate. ... However this gloomy forecast should not lead people to question the reforms meant to increase France's competitiveness. ... But it will compel the government not to abandon its goal of cutting 50 billion euros in the next three years."
All is lost in fight against IS: A report on ethnic cleansing by the IS terrorist militia in northern Iraq put out on Tuesday by Amnesty International has shocked the liberal Swedish daily Dagens Nyheter. The paper sees no hope that the IS can be countered in the long term: "What's needed is clear: humanitarian aid must be provided, the civilian population must be protected and the terrorists must be fought. But how that's supposed to work is entirely unclear. ... Bombs are not a long-term solution. And they don't help solve the humanitarian disaster. ... The frustrating truth is that the executions and horrifying reports about mass murder provoke abhorrence, but no forceful answer to all of this can be expected. At a press conference last week, US President Obama said that there can be no long-term strategy for the fight against the IS terrorists. That is very grim news indeed. ... In fact it's a tragedy."
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