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The Briefcase: Russia freezes us out, house prices and drinking on the job
This was the week in business.
FRIDAY ROLLS AROUND once again, and The Briefcase is here to give you a round-up of all that’s happened in the world of business, economics, and (this week only) inebriated labour.
Need to know
To Russia with love
Russian Prime Minister Dimitry Medvedev announced a full embargo on food products from the EU, US and other Western countries, throwing the export sector – and particularly companies that trade heavily with Russia – into crisis mode.
Who’s going to be badly affected by this in Ireland? Early indications were that much of the dairy industry’s dealings would be unaffected, but prepared foods and meat appear to be firmly in Russia’s firing line.
Irish food producers are only pawns in this geopolitical game, which will only heighten frustrations as the sanctions could go on for at least a year.
While current exports are pretty minor, accounting for around 2.5% of the total, Simon Coveney was quick to point out that Russia looms large in the plans of many exporters, who had targeted the country for future expansion.
Farmers will also be wary of the prospect of a flood of cheap consumer groceries that had been intended for Russia now looking for a home in the European market, depressing prices here.
ESRI wades in
It was a big week for the ESRI, with the State’s go-to think tank releasing no fewer than three missives on the economy.
The brains trust had both good and bad news: first up, it predicted that unemployment will dip below 10% next year, down to around 9.8%.
In addition to this Gross National Product, which excludes our sizeable international sector from measurements of economic well-being, is predicted to grow by around 3.5%.
However, in the same report, the ESRI said that the euro zone’s weak growth prospects are a concern, and flagged low investment, high unemployment and weak credit as major problems.
The think-tank also played its part in ensuring that the long running housing saga runs on through the summer.
Despite assuring us that another bubble is not underway, the ESRI did warn that there is a “significant housing shortage” in Dublin, and said that 86% of the houses to be built over the next ten years will be in or around the capital.
It also said that house prices in the Irish market are undervalued, despite the recent rapid escalation in property prices.
To a point, the ESRI is correct in saying that there’s no bubble, with the tightness of credit meaning rapid price increases are more likely the result of limited supply.
Nonetheless, the peculiar relationship between the Irish and property surely means that an abundance of demand, rapidly increasing property prices, and the looming threat of other hikes to costs of living is a heady – and volatile – mix.
Nice to know
- Denis O’Brien sold up €4.7 million worth of shares in Aer Lingus, bringing his total stake in the company to just over 2.4%.
- Details emerged of problems with the insolvency legislation – but there was divided opinion over their significance
- New research from the Central Bank showed that fewer people are re-defaulting on their mortgages after entering into restructured payment agreements – but there’s still major problems that need to be addressed.
- Tax revenue for the year to end July was ahead of target by €550 million – with the notable exception of the Department of Health, the Government’s sums for the year look solid, meaning we’re less likely than ever to get a rough budget in the autumn.
- On the international front, iconic pharmacists Boots was taken over by US retailer Walgreens for €3.9 billion, which netted the American outfit the 55% of the company that it didn’t already control.
Now you know
- Google was forced to remove a Bomb Gaza game from its app store
- There’s one million app jobs in Europe, and Apple is claiming half of them
- Eircom is considering a move of some assets and liabilities to Jersey in advance of a potential stock market floatation
- Our SME focus was on innovation, and one company which plans to make money by saving money for bigger outfits.
One for the road
We may all occasionally feel that our jobs are driving us to drink, but research published this week shows that some 44% of us have actually been under the influence at work.
We’ll drink to that. Just don’t tell the editor…
Read: Good numbers, burnt bondholders, and the ghosts of Irish banking>
Read: A US president, the Budget and definitely not a housing bubble>
