Monthly Archives: July 2017

Entrepreneurs Must Be Incentivised

Budget 2016 will mark a significant departure from previous years. In its Spring Statement earlier this year, the Government announced that Budget 2016 (which will be announced on Tuesday 13th October) will be the first expansionary Budget since December 2007. With this in mind, Budget 2016 must be used to support sustainable economic development and insulate our economy from external shocks, writes Mark O’Mahoney of Chambers Ireland.

Recent Exchequer tax receipts have evidenced how our economic performance thus far this year has exceeded all expectations. By the end of August, tax revenues stood at just over €27.3bn – more than €1.4bn ahead of forecast. Since early 2014, we have seen increasingly strong performance in GDP growth and export levels but, crucially, we have witnessed an increase in domestic demand, which finally has translated into increased employment rates.

The forecasts for 2016 again show a strong growth trajectory for GDP, increased tax buoyancy and further employment growth. There is a general perception that Ireland has come through the worst of the recession and that we are entering a new phase of economic growth.

The improving performance of the Irish economy means the Government will have choices to make as to how best to utilise Exchequer resources in Budget 2016. It is important that we get these choices right.

At Chambers Ireland, we believe that the Budget must serve two key objectives: First, it must instil a new dynamism to the national economy and reinforce economic growth; second, it must seek to insulate the national economy in so far as possible from internal and external risks that have the potential to undermine our future economic and social growth.

In our Pre-Budget Submission launched earlier this year, we made a number of recommendations, which we believe will support these two objectives. Overall, our proposed actions can be grouped into four categories:

 

1. Supporting Entrepreneurship and Business Growth

We must incentivise a new generation of entrepreneurs to establish businesses and generate indigenous growth and employment. Through a series of targeted tax adjustments that will have a limited impact on the Exchequer, we believe entrepreneurs and small businesses can begin to thrive. Key to this is to ensure equity in tax and USC treatment of owner-directors and self-employed, and to reduce the marginal tax rate to below 50%.

 

2. Supporting Local Economic Development

There has been a pronounced disparity in how some towns and counties in Ireland have experienced the recovery. Output and employment remain low in numerous areas, and many of our Chambers outside of large urban centres report that their members are still struggling. There has been a renewed focus nationally on local economic development. We have outlined measures identified by our Chamber Network as best practice that can be implemented nationally to support this process. One such example is to incentivise Local Authorities to ring fence a portion of commercial rates for local economic development, with the Exchequer matching the funding.

 

3. Investing in Physical and Social Infrastructure

Ireland needs the right social and physical infrastructure if it is to maintain its international competitiveness. We are competing against the top countries in the OECD for investment and for market share. Letting our national infrastructure depreciate is not an option, and we have consequently called for prioritised investment in infrastructure to ensure we can support our future economic growth. Equally, if we are to position ourselves as a knowledge economy, our human capital must be developed to its fullest. We have highlighted areas where we believe investment and reform are required urgently to maintain our capital stock. Among these is to make childcare affordable by introducing direct public subvention and reforming the Early Childhood Care and Education (ECCE) scheme.

Brexit Could Affect Irish Tourism

As one of Ireland’s largest indigenous industries, tourism is vital for the country’s economic well-being. If the UK votes to leave the EU, there could be far-reaching consequences for the sector in Ireland, writes Tim Fenn from the Irish Hotels Federation.

The tourism sector employs over 205,000 people throughout Ireland, equivalent to 11% of total employment. It accounts for 4% of GNP and provides €7.3 billion in annual revenues, supporting the local economies of every village, town and county.

Strong Sector Growth Must be Sustained

In recent years, Irish tourism has benefited from a number of important developments that have supported growth in overseas visitors to our shores, including economic upturns in our major overseas markets such as the United Kingdom and North America. Domestic tourism is also recovering, largely on foot of a strong uplift in Irish consumer sentiment, which is of particular importance to tourism businesses outside the main urban destinations and traditional visitor hotspots.

Having created over 33,000 jobs during the last five years, tourism is now a major source of new employment generation. Given the right economic conditions, the Irish Hotels Federation estimates that tourism has the potential to create a further 40,000 additional new jobs by 2021. Continued growth in the sector cannot be taken for granted, however, and anything that would jeopardise visitor numbers from our key overseas markets, such as the UK, would be a cause for concern.

 

Potential Fallout of Brexit

The importance of the UK market cannot be over-stated. The UK is Ireland’s largest source market for inbound tourism, accounting for approximately 40% of overseas visitors. Since 2012, visitor numbers from Great Britain have increased by an impressive 28%, reaching 3.55 million in 2015. This rebound has played a vital role in Irish tourism’s recovery, underpinned by an upturn in the British economy and an increase in Ireland’s competitiveness as a tourism destination.

A decision by the UK to leave the European Union could have potentially far-reaching consequences for Ireland given our nearest neighbour is also our largest trading partner. From a tourism industry perspective, the implications of such a decision would very much depend on the terms of engagement negotiated post-exit between the UK and remaining EU bloc. A critical factor would be the level of access to the EU single market secured by the UK, and this could have significant ramifications in the areas of transport, border controls, competitiveness, investment and currency stability.

The Irish Hotels Federation believes the most benign outcome for tourism would be for the UK to remain within the EU. This would remove the current uncertainty about the UK’s relationship with Europe and avoid potential negative impacts for the Irish economy, particularly in terms of trade, travel and competitiveness.

To date, the uncertainty has contributed to a significant fall in the value of sterling against the euro and there is a risk that sterling could fall further if the UK voted to leave the EU, reducing the spending power of visitors from Britain and Northern Ireland. On the other hand, a vote to remain in the EU could result in a strengthening of sterling, which would benefit Irish tourism.

Academy Place Decided by Public Vote

The final place on the 2016 AIB Start-up Academy programme has been decided by public vote via a “Wildcard” competition hosted by Joe.ie and Her.ie.

Thousands of voters took to Twitter over five days, with Topper Technologies receiving over 30,000 votes to emerge as the winner. The company provides a one-stop shop for CRM, events, appointments, and payments online.

Jenny Reynolds, founder of Topper Technologies, was delighted with the win: “I am so happy, there are no words! When you’re a start-up, it feels like you’re running up a steep hill. It was such an emotional journey; the support was unbelievable.”

Jenny has already taken her well-deserved place on the intensive training and mentoring programme with Irish Times Training, which commenced on 29th February. The programme will cover topics such as business and marketing strategy, social media training, eCommerce and design thinking.

The full list of finalists are:

  • Blackwater Distillery  – Ireland’s first craft whisky and gin distillery
  • Brendan Joseph  – Working with gorgeous natural fibres to distil precious moments into woven wearable art
  • Buska Ltd – Renting, delivering and collecting heavy duty, stackable, closable, recycled plastic Buska moving boxes for people on the move
  • Cool Bean Company – A healthy (beany) meal in a pot
  • Dropchef  – The smartest way to cook a healthy dinner
  • Leaves – Pasta full meal solution that cooks in just five minutes
  • Nasal Medical Ltd – Nose implants that prevent snoring and sleep apnea, as well as 98% of airbourne allergies
  • Popertee – Find the perfect retail space for your business
  • Queezybags – The compact, clean and convenient way to ensure nausea and sickness don’t get in the way of life
  • Rebel Chilli  – The home of award-winning chilli sauce
  • Topper Technologies Ltd – A one-stop shop for CRM, events, appointments and payments

 

How to Protect Your Business

The UK Government has set 23rd June 2016 as the date for its “In-Out” referendum vote on Britain’s continued membership of the EU. Opinion polls are pointing to a very close outcome, and an “Out” result would undoubtedly change the landscape for business owners in Ireland, writes Oliver Mangan, Chief Economist at AIB.

The UK EU referendum issue has now moved centre stage in the UK. We view it as the primary event risk for the UK and Ireland in 2016, as a vote to leave the EU would have profound economic and political consequences for both countries. It is now a 50/50 call, in our view, on whether the UK votes to leave or remain in the EU.

Impact on the UK Economy – Uncertainty About Trade Agreements

Most studies show that leaving the EU would have a negative impact on the UK economy. It could take up to a decade for the full economic impact to be felt in terms of foreign direct investment (FDI), trade flows, migration etc. There would obviously be negative knock-on effects for Ireland given its close ties with the UK.

 

The critical question centres around what type of trade arrangements would be put in place between the UK and EU post a Brexit. The more the UK seeks to regain control over policy and regulations, the more difficult it will be for it to negotiate a worthwhile trade deal with the EU. In order to secure a preferential trade deal, the UK is likely to have to adhere to EU rules and regulations.
It would be a major drawback for the UK if it had to fall back on World Trade Organization (WTO) rules, which is likely to involve the imposition of trade tariffs. Some 45% of UK exports go to the EU, so it is a vital market. On the other hand, the UK takes just 10% of EU exports. Thus, the UK is not as vital to the EU for trade as the EU is to the UK.
Trade Impact on Ireland

Ireland has very close trade and economic links with the UK and so would be greatly impacted by Brexit. Those trading with the UK, at a minimum, would face increased administrative and regulatory costs and possibly tariffs. A recent ESRI report suggests that there could also be a significant decline in bilateral trade. Sectors such as agriculture, retailing, energy and financial services are likely to be most impacted by Brexit.
The main Irish exports to the UK are food, pharma, ICT and a broad range of services, while on the import side, energy, manufactured goods and services are all important. Ireland is the UK’s fifth largest export market. Some 33% of Ireland’s imported goods come from the UK. It is worth noting that more goods are imported into Ireland from the UK than the rest of the EU combined.

How Brexit Could Affect Your Business

The UK Government has set 23rd June 2016 as the date for its “In-Out” referendum vote on Britain’s continued membership of the EU. Opinion polls are pointing to a very close outcome, and an “Out” result would undoubtedly change the landscape for business owners in Ireland, writes Oliver Mangan, Chief Economist at AIB.

The UK EU referendum issue has now moved centre stage in the UK. We view it as the primary event risk for the UK and Ireland in 2016, as a vote to leave the EU would have profound economic and political consequences for both countries. It is now a 50/50 call, in our view, on whether the UK votes to leave or remain in the EU.

Impact on the UK Economy – Uncertainty About Trade Agreements

Most studies show that leaving the EU would have a negative impact on the UK economy. It could take up to a decade for the full economic impact to be felt in terms of foreign direct investment (FDI), trade flows, migration etc. There would obviously be negative knock-on effects for Ireland given its close ties with the UK.

 

The critical question centres around what type of trade arrangements would be put in place between the UK and EU post a Brexit. The more the UK seeks to regain control over policy and regulations, the more difficult it will be for it to negotiate a worthwhile trade deal with the EU. In order to secure a preferential trade deal, the UK is likely to have to adhere to EU rules and regulations.
It would be a major drawback for the UK if it had to fall back on World Trade Organization (WTO) rules, which is likely to involve the imposition of trade tariffs. Some 45% of UK exports go to the EU, so it is a vital market. On the other hand, the UK takes just 10% of EU exports. Thus, the UK is not as vital to the EU for trade as the EU is to the UK.
Trade Impact on Ireland

Ireland has very close trade and economic links with the UK and so would be greatly impacted by Brexit. Those trading with the UK, at a minimum, would face increased administrative and regulatory costs and possibly tariffs. A recent ESRI report suggests that there could also be a significant decline in bilateral trade. Sectors such as agriculture, retailing, energy and financial services are likely to be most impacted by Brexit.
The main Irish exports to the UK are food, pharma, ICT and a broad range of services, while on the import side, energy, manufactured goods and services are all important. Ireland is the UK’s fifth largest export market. Some 33% of Ireland’s imported goods come from the UK. It is worth noting that more goods are imported into Ireland from the UK than the rest of the EU combined.