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News : Irish Last Updated: Jan 8, 2013 - 9:51 AM

Tuesday Newspaper Review - Irish Business News and International Stories - - January 08, 2013
By Finfacts Team
Jan 8, 2013 - 9:44 AM

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The Irish Independent reports that the number of people employed by IDA-supported multinationals in Ireland jumped last year to its highest level since the crash.

Total employment in IDA-supported companies stood at 152,785 last year, up from 146,215 in 2011. The jump in jobs came as fewer jobs were lost and companies continued to create employment at levels close to previous years.

Jobs Minister Richard Bruton said the results demonstrated that international confidence had returned to Ireland.

"Some of the most ambitious and dynamic companies in the world are picking Ireland as the best location to deliver their innovative services," Mr Bruton said.

Key figures from the IDA include:

  • 145 individual investments were recorded last year, with 66 from companies coming to Ireland for the first time;
  • Announcements came from Apple, PayPal, Northern Trust, EA Games, Fidelity Investments, Allergan and Eli Lilly;
  • About 80pc of the job losses that hit IDA companies in the crash have been recovered.

While the headline figure was stronger than at any time since the crash began in 2008, the number of jobs created in 2012 fell fractionally to 12,722, according to the end-of-year results from the IDA.

This was offset by the number of job losses in the sector falling to their lowest level in a decade at 6,152, meaning the net job creation was 6,570.

About 4,000 of these were in the ICT/technology sector.

However, the figures account for jobs agreed between the companies and the IDA, and do not necessarily mean that all the positions were filled by the end of last year.

Mr Bruton hailed what he claimed was a strong performance from the technology sector, which accounted for the bulk of the jobs. Other growth sectors included social and digital media, international financial services, pharmaceutical and medical devices.

IDA chief executive Barry O'Leary said he was confident of meeting similar jobs targets next year, despite the global challenges.

"Key global markets are slowing down, particularly in Europe, which is a key focus for the IDA's existing and potential clients," Mr O'Leary said.


"However, there are definite opportunities for growth in the IT and technology sector, in specific areas of financial services, in life sciences, in social and digital media and in sectors where consolidation is taking place on a pan-European basis."

The IDA has set itself the target of creating 62,000 new jobs in the four years between 2010 and 2014.

Mr O'Leary said there were large-scale projects in the pipeline to be won, but Ireland faced stiff competition.

Meanwhile, Mr Bruton staunchly defended the Government's 12.5pc corporation tax rate amid the debate in the UK and US concerning the taxes paid by multinationals.

Mr Bruton described the tax rate as "strategically important to Irish economic recovery", and claimed Ireland had a clear and transparent tax strategy.

"The scrutiny of corporate tax that's occurring in other countries would be misplaced in Ireland," Mr Bruton said.

"International evidence shows that the effective tax rate in Ireland is 11.9pc, very close to the nominal rate of 12.5pc.

"In other countries you have specially tailored tax regimes for individual projects. So the effective rate is dramatically lower than the nominal rate."

The Irish Independent also reports that Enterprise Minister Richard Bruton has suggested that increasing taxes on high earners could have a negative impact on investment.

He warned that Ireland must be conscious of the issue as the IDA announced 6,570 jobs were created by foreign multinationals here last year.

Fine Gael and Labour have been exchanging statements over a minister's claim that there will be no more income tax rises during the lifetime of the Government.

The spat follows Fine Gael's rejection of Labour's proposal in the Budget to increase the Universal Social Charge for those on more than €100,000.

At the announcement of the IDA 2012 results, Mr Bruton would not be drawn specifically on how targeting the well-off with higher taxes would affect job creation, saying he did not want to talk about budgetary strategy.


But he added: "I'm saying that (concerning) our impact on international competitiveness and our ability to attract investment, we have to be conscious of this issue. I'm not trying to make a pronouncement about budgetary strategy in the years ahead."

Finance Minister Michael Noonan revealed after the Budget last month that Labour plans for a 3pc increase in the Universal Social Charge for those earning more than €100,000 were scrapped amid approaches from the multinational sector.

Labour backed down after Fine Gael countered with a proposal to slash welfare rates.

Mr Bruton's comments came as the IDA revealed that 12,722 jobs in the multinational sector were created last year, though 6,152 were lost, leaving the net jobs figure at 6,570. Total employment in the sector last year was 152,785, up from 146,215 in 2011.

The minister also offered a robust defence of Ireland's 12.5pc corporation tax rate, insisting the country had always been transparent regarding the tax rate imposed on corporate profits.

The Irish Times reports that the cost of legal fees for witnesses to the Mahon and Moriarty tribunals is likely to leave the taxpayer with an overall bill of up to €400 million for both inquiries, according to internal Government records.

While both tribunals have completed their final reports, the State has yet to pay the bulk of the legal costs of individuals or corporations who were involved in the tribunals over a 15-year period.

Government documents show that original estimates compiled by the Comptroller and Auditor General several years ago may be exceeded significantly.

A Supreme Court ruling in 2010 – which held that the Mahon tribunal may not be able to refuse costs to witnesses who obstructed its work – has contributed to upward pressure on legal costs.


Briefing material shows that the Mahon tribunal into planning irregularities has cost about €110 million in legal and administrative costs to date.

The tribunal has told the Government that third-party costs for more than 400 witnesses and 9,000 discovery orders could add a further €147 million to the bill.

This would bring the overall total for the Mahon tribunal alone to almost €260 million. Government officials note, however, that the total cost of third-party costs cannot be reliably projected at this point.

The biggest settlements for third-party costs relating to the Mahon Tribunal so far have been made to the legal team representing whistleblower James Gogarty (€3.5 million), who first revealed details of corrupt payments to former minister Ray Burke.

RTÉ settled the largest corporate claim, at just more than €1 million. The broadcaster gave evidence surrounding the tribunal’s investigation into a contribution made by Century Radio’s Oliver Barry to former Fianna Fáil minister Ray Burke. A total of €10 million has been paid in third party legal fees to date.

However, legal costs for the later stages of the tribunal dealing with the allegations of developer Tom Gilmartin and lobbyist Frank Dunlop have yet to be dealt with. These modules alone are expected to run into tens of millions of euro.

Significant cuts 

Government records show that while legal costs are mounting, the final bills have been significantly cut in many cases after being sent for independent review.

For example, Donnelly Neary and Donnelly – the Newry-based solicitors who represented two lawyers who put up the £10,000 reward for information on planning corruption which helped bring about the tribunal – had its fees cut by 58 per cent.

Anglo Irish Bank – which sought €143,000 for legal costs – had its bill cut to €85,000, a 40 per cent reduction.

Separately, the Moriarty tribunal into the awarding of the State’s second mobile phone licence has accumulated costs of at least €35 million to date. Its total bill is likely to be well in excess of €100 million once it has settled third-party legal costs.

The Irish Times also reports that Ireland may bring its first syndicated sovereign deal since 2010 to the markets as early as today, as the National Treasury Asset Management Agency (NTMA) looks to take advantage of positive investor sentiment to raise an expected €2 billion.

The last time Ireland raised funds through a syndicated deal – which differs from an auction in that the price is pre-agreed – was before the EU-IMF bailout programme of December 2010.

Yesterday the NTMA announced that it would seek to raise new money in the “near future”, but it is understood that the deal, which is a syndicated tap of its 2017 Treasury Bond, could get away as early as today.

Institutional investors 

The deal will open up the 2017 bond to institutional investors at a pre-determined price and a five-year term through mandated joint lead managers, Barclays, Danske, Davy, RBS and Société Générale.

It is expected the deal will be priced in or about the 3.25 per cent range.

“The 2017 bond has been very tight in the repo market for the last few months and this should help increase liquidity in the issue. The current issue size is € 3.89 billion and the issue last traded at circa 3.25 per cent in yield terms (having traded at 3.15 per cent just prior to the announcement),” said Jim Ryan, a of Glas Securities.

Given that Ireland’s average cost of bond funding was circa 4.7 per cent prior to entering the bailout, to fund at such a level is a remarkable turnaround. It also represents a level lower than that which Ireland is borrowing from the Troika, about 3.5 per cent.

“This is a very pleasing outcome for the NTMA and the Irish authorities,” added Mr Ryan.

The deal also edges Ireland closer to fiscal sovereignty.

“I think it’s more likely than not now,” said Mr Ryan of Ireland’s chances of exiting the bailout later this year, although he added there were “still a few hurdles to cross”.

Owen Callan, senior fixed income strategist at Danske Bank Markets, said the deal “marks a massive step in Ireland’s long process of fully regaining long term bond market access and fully normalising its primary market issuance, in 2013”.

Once the deal gets away successfully, analysts expect there will be one or two more syndicated bond issuances during the course of the year.

Ireland has a funding requirement of about €10.5 billion in 2013.

The Irish Examiner reports that the volume of retail sales, which does not measure changes in price levels, fell by 1.1% compared with October and by 0.5% compared with Nov 2011. Excluding car sales, the volume of retail sales decreased by 1% compared with the previous month and 0.3% on the year.

Retail sales measured by prices decreased by 1.2% in November compared with October and were down by 0.2% compared with year-earlier levels.

Anecdotal evidence suggests there was a significant increase in the retail trade over December.

NCB economist Philip O’Sullivan said that delving into the detail we see that the impact of the switch-off of analogue terrestrial television on Oct 24 has distorted the headline numbers for a second successive month.

“October’s reading was +1.7% month on month (a 10-month high), buoyed by a 24% month-by-month jump in sales of ‘Electrical Goods’ as households prepared for the digital switchover. In November, sales in that segment declined by 18% in volume terms as this effect unwound,” he said .

The Vat collected in December’s sales will show up in the January/February exchequer figures. Last week, the Minister for Finance Michael Noonan said he expected strong figures in December to boost the national coffers in the first quarter of this year.

The largest increases in November were in the pub trade, which saw a 3.2% rise in the month. Furniture and lighting products were up 2.7% in November and department stores experienced a 2.4% increase. Apart from electrical goods, which experienced a 17.8% drop in November, fuel sales were down 3.2% in the month.

“In all, core retail sales — which exclude the volatile motor trade, but includes the electrical goods segment — remain in positive territory on an annual basis in both value (+0.6% year by year jump) and volume (+0.3% year by year) terms for a fourth successive month. This reflects a stabilisation in domestic economic indicators during the second half of 2012. We expect to see a stronger retail sales performance in December, helped by favourable base effects (ie the electrical goods effect) and encouraging comments from retailers about the key Christmas sales period,” added Mr O’Sullivan.

Foreign news reviews and more comprehensive coverage of Irish news is available in our Daily News Digest in the Global category on Finfacts Premium.

Check out our subscription service, Finfacts Premium , at a low annual charge of €25 - - if you are a regular user of Finfacts, 50 euro cent a week is hardly a huge ask to support the service.

© Copyright 2011 by Finfacts.com

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