Independent reports that the downturn is putting huge pressure on household
budgets, with a new survey showing that more than 1.6 million people have €50 or
less to live on every month after paying essential bills.
And the majority of people believe their financial situation will worsen this
year, blaming the latest Budget for putting a new squeeze on incomes.
Property tax and the budgetary change to pay related social insurance (PRSI)
have been named as pressure points on family spending, a new survey commissioned
by the Irish League of Credit Unions indicates.
Two-fifths of adults have had to sacrifice spending on other household items
such as food and entertainment to pay energy bills.
Working adults have emerged as among those most financially put-upon, according
to the survey that was conducted by iReach among 1,000 adults in December.
There has been a big rise in the number of workers who say they have €50 or less
to live on after paying essential bills.
Close to 700,000 people with jobs had just €50 or less a month to survive on in
December after covering their main bills. This is up 69,000 from October last
year. When homemakers and the unemployed are included, the number risees to 1.6
million. Last month's savage Budget had a negative impact on nine out of 10
One of the rare pieces of good news is that there has been a slight fall in the
number of households struggling to pay bills on time.
But 46pc of households still find bill paying a huge issue, down from 50pc last
The survey also found that seven out of 10 adults are unable to save.
This is far higher than the findings of a Nationwide (UK) Ireland survey that
found half were unable to save.
Yesterday the Irish League of Credit Unions said the average amount being saved
every month was down €20 to €180.
Car-related costs have gone up for householders, with petrol and diesel at
record highs and insurance increasing for young women.
Two-fifths believe that the property tax will have the most significant impact
Other areas that are also likely to have a marked impact this year include
changes in the PRSI threshold, increased car registration costs and the cut to
Large numbers report that at some point in 2012 they had to sacrifice spending
on other household items to pay their energy bills.
Chief executive of the Irish League of Credit Unions Kieron Brennan said:
"Disposable income overall continues to decrease with 72pc stating that they
have less disposable income in December than they did in December 2011."
He said many are simply continuing to struggle to survive on a daily basis.
Many individuals and families are sacrificing spending on other household items
including food so that they can keep on top of their bills, he added.
The Irish Independent also reports that a new scheme to
put long-term unemployed to work as council workers is being planned by the
Up to 3,000 people on the dole for more than two years will be put to work at
street cleaning, cutting grass and carrying out road works.
The Cabinet will hold a meeting today where a wide range of initiatives to
create jobs will be discussed.
Environment Minister Phil Hogan and Social Protection Minister Joan Burton are
working on the council work scheme.
Up to 2,000 of the jobs will come on line by mid-year with another 1,000 by the
end of the year. The posts won't replace existing jobs or displace staff but is
aimed at giving local authorities additional resources.
Although the exact details have yet to be worked out, the scheme is expected to
work in a similar manner to the Jobs Bridge scheme. It is not yet clear how many
hours a week workers will work for or if they will be paid extra on top of their
Ministers will discuss measures that are expected to be included in the new
version of the Action Plan for Jobs for 2013. Every minister will have to
outline to Taoiseach Enda Kenny what they have in the pipeline to create jobs
and what they need done in their sector to encourage job creation.
Jobs Minister Richard Bruton is due to publish the next version of the jobs
plans next year. The Action Plan for Jobs is the Government's plan to create
100,000 jobs through a series of policy changes.
The Irish Times reports that all
Ministers have been required to supply a memo to the Taoiseach in advance of
today’s special Cabinet meeting on jobs, detailing how they propose to tackle
The proposals for job creation and job activation
measures supplied by 14 departments will form the basis for today’s discussions.
Taoiseach Enda Kenny has said repeatedly since the Coalition took office almost
two years ago that job creation is his top priority.
“The Taoiseach’s resolve on this should not be
underestimated,” a Government source said. “Back in the autumn, he asked every
Minister to come up with ideas for savings and that has led to the talks on a
new Croke Park deal. He is equally determined to get results on the jobs front.”
The Cabinet meeting is designed to ensure that
individual Ministers are committed to actions in their own departments that will
ultimately result in reducing unemployment.
“The Government can’t create jobs itself but it
can create the conditions in which employment can expand and every department
has a role to play in that,” the Government source added.
A detailed Action Plan for Jobs was published
last year by Minister for Jobs and Enterprise Richard Bruton, but the aim now is
to get every other member of the Government involved in taking the decisions
necessary to boost job creation.
While there will be some discussion about the
role of inward investment in maintaining the strong export sector in order to
boost employment, there will be a focus on how the domestic economy can be
Measures to enhance competitiveness and
facilitate access to credit are regarded as critical and Ministers will discuss
how their departments can facilitate that process.
The operation of three funds worth €850 million,
which were announced by the National Pension Reserve Fund last week, will form
part of the discussions.
Those funds are designed to provide small and
medium enterprises with access to equity, credit and investment.
The role of Nama and the banking system in
helping to promote investment in enterprise will also be discussed today.
The State’s capital investment programme will
also feature in the discussions, as will the involvement of local government in
investing in necessary infrastructure.
As well as job creation, the role of the welfare
system in promoting job-activation measures will form another important strand
in the discussions.
The Department of Social Protection has produced
a comprehensive report, Pathways to Work, designed to get people off welfare and
into employment, but there is some frustration at the slow pace of change in the
Ministers will look at ways of accelerating
change to enable people move more freely between the welfare system and the jobs
During the discussions they will also focus on
the importance of retraining to ensure the workforce can adapt to the rapid
changes in the labour market.
The Irish Times also reports
that the banks will be required to raise more capital if they do not begin
dealing with distressed mortgages, the governor of the Central Bank has said.
Addressing an Oireachtas committee yesterday,
Prof Patrick Honohan said there were approximately 100,000 cases of loans in
distress and the Central Bank had been putting pressure on the banks to put in
place “a machine” to process them.
He said that once the machine was in place, the
Central Bank “can and will” then require the banks to deal with prescribed
numbers of cases.
If the banks failed to do this, the Central Bank
would require them to raise more capital, as not dealing with the loans would
affect the risk position of the banks.
Prof Honohan made his remarks to the Joint
Committee on Finance, Public Expenditure and Reform, where a number of TDs
complained that the Central Bank was not doing enough to force the banks to deal
with people who had loans they could not service.
Prof Honohan told e committee chairman Ciarán
Lynch (Labour) that the issue was a key one for the Central Bank.
His comments came as the ratings agency Standard
Poor reiterated its negative view on Ireland and said the banks may need more
Richard Boyd Barrett (Independent) said the
policies supported by Prof Honohan shared the common thread that it was “Joe
Public who carried the can” and the financial institutions that were protected.
Prof Honohan said this was not the case and there
would be “dire consequences”, not least for Joe Public, if Ireland followed Mr
Boyd Barrett’s suggestion that bondholders owned billions by the banks were not
Prof Honohan said he did not want to speculate as
to whether Ireland’s bid for a deal on the €3.1 billion Irish Bank Resolution
promissory note payment, would be achieved before to March 31st next, when the
payment is due.
He said there was “considerable goodwill from all
interlocutors in this process” but that it had not been easy to find a generally
“Taking into account both the statutory position
and wider policy stance of the ECB, an initiative of this type will be novel
and, as such, challenging.”
The bank had been working carefully to build
understanding and confidence around a set of proposed transactions designed to
deliver for Ireland, while not taking other decision-makers too far out of their
comfort zone, he said.
“What we have designed is, I believe, largely in
the interests of the euro system as a whole,” Prof Honohan added.
Done and dusted
When Pearse Doherty of Sinn Féin said it was
clear from those comments that the solution was “done and dusted”, the governor
said he was “over interpreting” his comments.
He said the deal, if achieved, would be
“something of great advantage to Ireland”.
The solution being sought would allow a slower
and better path for the debt going forward, he said.
Any transaction that allowed a lengthening of
maturity could increase the level of interest to be paid, but if the interest
rate was low enough that issue could be addressed
Joe Higgins (Socialist Party) said Ireland had 1
per cent of the EU’s population but was, according to Eurostat, shouldering 42
per cent of Europe’s banking bailout costs.
The Irish Examiner
reports that in a detailed analysis of the airline market, Davy forecast that
Ryanair’s stock price could increase from €5.35 to over €6 in the coming year.
Analyst Stephen Furlong said he can see the airline growing. “With a favourable
capacity environment, positive revenue momentum, and the potential for a renewed
growth story, we are increasing our Ryanair price target to €6 (from €5.35),” he
In the near term, Davy does not believe Ryanair will record considerable growth
in passengers this year as the airline was not expected to take delivery of any
new aircraft, but due to Ryanair’s business model, revenues could still be
expected to grow.
“With no further aircraft deliveries implying just 4% capacity growth this
summer and some building blocks of unit revenue already put in place in terms of
priority seating and credit card fees, coupled with Ryanair’s legendary cost
discipline, we are raising our price target to €6 and maintaining our
‘outperform’ rating,” he said.
Looking at the long-term future of Ryanair, Mr Furlong said the airline, which
carried nearly 80m passengers last year, could grow its number by 50%.
“Ryanair has circa 12% of the European short-haul market and sees the potential
to grow profitably to 120m passengers per annum over the next 10 years. We see
the story returning to one of growth, which could lead to multiple expansion,”
Davy expects an update on a deal with Boeing to provide the airline with the
capacity to fuel expansion. The airline will also benefit from the sale of
Davy was not as bullish on the Aer Lingus share price. The analysis forecasts a
full year operating profit of €73.9m (€72.8m in H2) on revenue of €1.37m.
The airline suffered last year as a result of weaker business demand in core
routes to London during the Olympics as well as fuel price and airport cost
inflation. However, Aer Lingus remains healthy.
“Forward bookings were ahead of last year; since then, traffic statistics have
been strong, notably on long haul. At the end of the quarter, the airline had
gross cash of €990.8m (after the €16m dividend payment) and debt of €549.7m. The
Greenfield cost programme has delivered more than €100m in cost savings,” Mr
Overall, Davy said that the larger airlines — IAG, Lufthansa, and Air France-KLM
— were finally recognising the challenges that they were facing from the low
cost airlines such as easyJet and Ryanair.
“We are more positive on the network airlines as they are finally getting
serious about the need for fundamental restructuring,” he said.
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