Wednesday Newspaper Review - Irish Business News and International Stories - - October 01, 2014
By Finfacts Team
Oct 1, 2014 - 12:06 PM

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Irish Independent

Russia's central bank is weighing the introduction of temporary capital controls if the flow of money out of the country intensifies, according to two officials with direct knowledge of the discussions.

The measures would be preventative and used only if net outflows rise significantly, the people said, asking not to be identified because no decision has been made. They didn't give a timeline or a level that may force such a move, saying they are looking at all possible scenarios.

The discussions are the latest sign that US and European sanctions are hurting Russia and making its monetary authority rethink policies it sought to avoid.

The ruble weakened to a record low yesterday, breaching the level where the regulator steps in to support the currency. The Economy Ministry last week raised its estimate for this year's outflows to $100bn (€79bn), a 64pc jump from last year.

Ulster Bank has dramatically revised the scale of expected loan losses this year, betting that the rising economy and recovering house prices will boost its financial position.

Its parent Royal Bank of Scotland (RBS) said yesterday that it expects to beat previous guidance for £1bn (€1.3bn) of loan impairments this year.

The bank said it will reduce by £800m provisions set aside to cover losses on bad loans, after an improvement in economic conditions.

Loan losses at Ulster Bank will be £300m less than expected, and Irish problem loans are understood to make up a significant share of a £500m improvement at the RBS Capital Resolution (RCR) unit, an internal bad bank established by the lender.

That is because problem commercial property loans from here make up a disproportionately large share of the total RBS bad bank.

Eurozone inflation slowed in September to the lowest level in five years, challenging European Central Bank (ECB) officials gathering this week to decide whether more measures are needed to avert deflation.

Consumer prices rose an annual 0.3pc, the European Union's statistics office in Luxembourg said yesterday. That's in line with the median estimate in a Bloomberg News survey and follows a reading of 0.4pc in August. Unemployment held at 11.5pc in August, Eurostat said in a separate report.

ECB President Mario Draghi told politicians in Brussels on September 22 that policy makers remain "fully determined" to shore up inflation, which has undershot the central bank's goal since early 2013.

Policy makers have agreed on unprecedented stimulus in the past four months, and are set to unveil details of an asset-purchase plan that will help add as much as €1 trillion to the ECB's balance sheet.

Irish Times

Enda Kenny emerged from the political wreckage of another bad day at the office yesterday to heap praise on a man who, by common consent and acclaim, is one of the chief architects of modern Ireland while also being older than the State itself.

Last night the Taoiseach launched Dr TK Whitaker – A Portrait of a Patriot, a biography by Anne Chambers of the economist and retired public servant credited, along with former taoiseach Sean Lemass, with modernising the Irish economy and outlook in the 1950s and 1960s.

The Taoiseach called Dr Whitaker “a brilliant man, a man who made a singular and peerless contribution to life on the island of Ireland, a national treasure”.

Referring to his clarity, curiosity, wisdom and imagination, Mr Kenny said he agreed with the author’s description of 97-year-old Dr Whitaker’s “deeply principled morality” which saw him “make and live a commitment to bring equity and order in an unruly world”.

Martin Wolf of FT: When should growing inequality concern us? This is a moral and political question. It is also an economic one. It is increasingly recognised that, beyond a certain point, inequality will be a source of significant economic ills.

The United States – both the most important high-income economy and much the most unequal – is providing a test bed for the economic impact of inequality. The results are worrying.

This realisation has now spread to institutions that would not normally be accused of socialism. A report written by the chief US economist of Standard & Poor’s, and another from Morgan Stanley, agree that inequality is not only rising but having damaging effects on the US economy.

The case for the prosecution has been made. At issue are separate tax opinions Revenue issued to Apple in 1991 and 2007. Both the Government and Apple have insisted there is nothing improper going on at all, but competition commissioner Joaquin Almunia doesn’t hold back. His preliminary assessment is damning.

Almunia finds that the two Revenue opinions gave Apple “selective advantage” which is obtained every year and ongoing. Such an advantage is illegal under European law. The company may yet be obliged to repay tax foregone dating back to 2003.

A repayment would deliver a short-term fillip to the Exchequer. But any uplift benefit would be outweighed in spades if the commission decides that Revenue has struck special deals behind closed doors with the world’s largest company.

Irish Examiner

This year has seen the largest number of new company establishments since 2007, with further falls in insolvency rates also noted.

New figures from business intelligence provider Vision-net show that 12,890 companies were established during the first nine months of 2014 — the highest rate for seven years and a 12% increase on the same period last year.

When all start-ups are measured — taking in companies and sole trader businesses — 32,277 have been established so far this year, 3% more than in the first nine months of 2013.

A breakdown of the figures shows a strong performance from the technology sector, with more than 1,000 tech start-ups established.


Euro Topics: West's silence encourages Beijing: The West must help to dissuade Beijing from crushing the protests in Hong Kong, the Dutch daily De Volkskrant urges: "Until now the Western countries have held back for fear of harming their trade relations with powerful China. The danger is that China will see this silence as a licence to suppress the Umbrella protests with violence. ... The West must remind President Xi Jinping that Beijing will pay a high price if it crushes a democratic movement. Hong Kong's role as Asia's financial hub will be endangered. In addition, Taiwan will be convinced that the dream of joining up with China is an illusion ... Because it's becoming increasingly clear that unity does not bring freedom."

Mountain of debt leaves France with no choice: France's national debt rose above the €2,023 billion mark in the second quarter of this year, according to figures put out on Tuesday by the statistics institute Insee. The Catholic daily La Croix calls on the government to push ahead with its austerity programme: "In ten years France's mountain of debt has doubled in size, under both conservative and left-wing governments. Short-sighted decisions have been the order of the day. Today no one can shirk their responsibility by blaming the other side. The current government must not shy away from the planned cuts. It must weigh up where they are necessary and must not punish sectors that show promise, as these will have a long-term impact and make the country more dynamic. ... As for the people, they must think seriously about whether they can make the sacrifices being demanded of them now if it means securing a better future for their children."

Cañete must not be Environmental Commissioner: Environmental activists have called for protests ahead of today's EU Parliament hearing of Miguel Arias Cañete, Commissioner-designate for Climate Protection and Energy. Cañete, former Spanish Agriculture and Environment Minister, is accused of having ties to the oil industry. His selection does not put Europe in a good light, Ignacio Escolar writes in the leftist Spanish online paper "It could be that the Conservatives in the European Parliament tolerate the obvious conflict of interests, his macho comments and his having 'forgotten' to declare the salary bonuses he receives from his party [Partido Popular]. ... But what is truly disgraceful is to see that in many respects Europe still doesn't extend beyond the Pyrenees. The rest of Europe wouldn't accept a minister who takes decisions about the environment holding shares in the oil industry. No way. But here it has been allowed for two years, and only now that he wants to become Commissioner is he selling his stock."

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