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26 Apr 2019

Prize Bonds sales reach €574m in 2018 as fund grows to €3.4 billion

Prize Bonds sales reach €574m in 2018 as fund grows to €3.4 billion

The Prize Bond Company has reported gross sales of €574m, the second highest year on record after sales of €567m in 2017 and €670m in 2016.

The Prize Bond Company, which administers prize bonds on behalf of the National Treasury Management Agency, published its annual report today.

The report shows that the value of the prize bonds fund at the end of 2018 exceeded €3.4 billion, an increase of almost 8% on 2017 and the highest in the scheme’s history.

Meanwhile, the number of cash prizes won by customers stood at at 224,474 last year, down from 302,064 prizes in 2017.

The value of prizes amounted to €16.4m last year.

More than 4,600 prizes are issued every week and €1m prize draw takes place twice a year, in June and December.

The company said that by the end of 2018, unclaimed prizes accumulated since the launch of the product in 1957 amounted to €2.74m.

Unclaimed prizes are held indefinitely until claimed by a bond holder and every prize winner is contacted at the address last registered with the Prize Bond Company.

Full details of all prizes are included in a database listed on www.StateSavings.ie for customers to check.

John Daly, Chairman of the Prize Bond Company, said that customers are investing with confidence in the “unique” State Savings product.

Mr Daly said the Prize Bonds’ new website has made repeat purchases online convenient for customers who are increasingly looking for digital platforms to view and manage their investments with State Savings, the brand name used by the NTMA for the range of savings products offered by it to personal savers.

“Being able to service Prize Bonds customers’ needs across a variety of channels, including the Post Office network, remains a key focus for the company in the year ahead,” he added.

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26 Apr 2019

90.3% of new SME lending from top three lenders – Central Bank report

90.3% of new SME lending from top three lenders – Central Bank report

A new report on lending to small and medium sized businesses (SMEs) shows that credit demand remains low, while over 90% of new lending comes from the main three lenders here – AIB, Bank of Ireland and Ulster Bank.

The Central Bank’s SME Market Report for 2019 also shows that working capital remains the most common reason for credit applications among micro and small firms.

It also noted that credit for growth and expansion is more common among medium firms.

Today’s SME Market Report also found that rejection rates on bank finance applications have stabilised.

Today’s report found that gross new lending to SMEs declined 1.7% on the back of lower lending to the manufacturing, wholesale, retail, trade and repairs and primary industries sectors.

It said that credit demand remains low compared to previous years with just 20% of SMEs applying for credit in the months from April to September 2018.

Irish SMEs are also more reliant on leasing and hire purchase for investment activities than the EU average but are less reliant on bank loans, the Central Bank said.

It also found that interest rates on small loans in Ireland average about 5.7% – much higher than similar size loans in Europe where interest rates average 2.5%.

The Central Bank said that SME default rates have declined from 19.8% in December 2017 to 17.5% in June of last year.

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25 Apr 2019

Record number of women in workforce

Record number of women in workforce

A record number of women were in the workforce last year, according to the latest figures from Eurostat, with 78,000 more women at work than in 2014.

Overall, there was in excess of 804,700 women in the labour market, resulting in a participation rate of 77.2%, up from 72.5% in the decade since 2009.

Despite the increase last year, the female participation rate in the workforce in Ireland continues to remain below that of the EU average of 80.1%.

“We have come from a low base,” according to Dr Kara McGann, senior executive with Ibec, which represents Irish business.

“We only got rid of the marriage bar in 1973. Female labour market participation was not great by 1980. But we really saw rapid progress then as labour shortages kicked in, and women really contributed to economic growth during the Celtic Tiger years.”

Dr McGann said there are huge benefits to having more women in the workforce.

She said: “We are seeing a move by employers to embrace diversity and inclusion, and greater gender balance in our work places.

“We don’t have group think when we have that diversity of thought. We see higher productivity and higher engagement from that diversity within the workplace.”

The cost of childcare is a major problem for women, who are mothers, joining and remaining in the workforce. Ireland has one of the highest costs of childcare in the OECD.

Dr McGann said more than half of the average wage goes towards childcare costs, and while there has been improvements by the Government and the Department of Children and Youth Affairs, which introduced the National Childcare Scheme, formal childcare is still beyond the reach of many families.

“Not just lower income families but all income levels, so this is a constant and recurring problem,” she said. “We know that culturally this is an issue that falls more to women than to men, so it is women that we see step out of the work place.”

Other European countries have very heavily subsidised childcare, and Ibec recommends the same for Ireland by restructuring child benefit payments.

“We do have one of the highest direct payments in the form of child benefit to parents,” Dr McGann said.

“While the payments are there, they are not very well directed. €330 million is directed towards families that have incomes in excess of €100,000 per annum. If we could look at means testing this child benefit payment for higher income families and ring-fencing that saving into childcare services, this would go a long way.”

It is a recommendation that has been made a number of times in the past, but it is one that successive governments have avoided implementing.

Ibec also encourages its members to consider more flexible working arrangements for employees.

“We are seeing a move within employers to really look at that idea, that people bring their whole selves to work so having that flexibility, that work life balance, where we can manage our lives within work and outside of work. Not every arrangement can bring that flexibility but where it can we are seeing huge successes,” Dr McGann said.

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25 Apr 2019

No State spending spree: expenditure here stands at lowest share of GDP in the eurozone

No State spending spree: expenditure here stands at lowest share of GDP in the eurozone

Data released by Eurostat, the statistics arm of the EU, shows that Government spending here as a percentage of gross domestic product (GDP) is the lowest in the eurozone by a long way.

At 25.7pc, it comes in well below the 19-country bloc average of 46.8pc and far less than France, the biggest spender at 56pc.

Even though GDP is heavily distorted by the presence of multinationals here, the spending by the State is a vast degree lower than its eurozone peers.

The Government has vowed to keep spending on a leash as the economy comes off its export-driven sugar high of recent years that saw growth of 6.7pc last year.

The Department of Finance expects GDP growth to come in at 3.9pc this year and 3.3pc in 2020 and has said that the elimination of the budget deficit last year, when the State turned a surplus of €50m, was likely flattered by the impact of the economic cycle.

The Eurostat data also illustrates quite how far the country has come since the financial crisis after the budget deficit hit a peak of 32.1pc of GDP in 2010 and is now in balance, but the outcomes also show that other policy paths yielded outcomes that were as good as the one chosen here.

The euro area as a whole now has a budget deficit equivalent to 0.5pc of GDP, down from 6.2pc in 2009. While big-spending France is struggling to keep its deficit inside the confines of the Stability and Growth Pact, other members of the infamous ‘PIIGS’ club of crisis-hit economies have done well.

Portugal has a deficit of 0.5pc of GDP as of the end of 2018, down from 11.2pc in 2010.

Budget here suffered severe cuts in the early years of the post-crisis adjustment, but has since been aided by exports and the multinationals that have fattened coffers here by €14.3bn more than expected since 2015, according to employers group Ibec.

Portugal’s socialist Prime Minister Antonio Costa chose a different route when he took office in 2015 after the previous government imposed austerity measures in exchange for a €78bn bailout. He reversed many of the cutbacks, in the process pushing the budget deficit well beyond agreed levels. But an end to the hawkish, deficit-cutting approach revived the economy and by many metrics, those policies have been just as successful as the austerity imposed here as unemployment now sits at pre-crisis levels of 6.7pc, in line with the EU average.

Just like our own Taoiseach Leo Varadkar, Mr Costa was running a coalition government.

And just like Ireland, government debt levels in Portugal are high, at €244bn and more than 122pc of GDP compared with €206bn here and 64.8pc of GDP, although in terms of gross national income (GNI*) which is viewed as a better assessment of the real Irish economy, debt here stands at 107.3pc.

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25 Apr 2019

Apartments on the rise as house-building slows

Apartments on the rise as house-building slows

The number of apartments built here increased 64pc in the first three months of the year, driven by investment from so-called ‘cuckoo funds’.

At the same time there has been a slow-down in the pace of new house-building, which has clocked up the slowest increase since 2013.

The number of apartment units finished in the first three months of this year was up 64pc compared to the same period last year, new figures from Goodbody show.

In the build-to-rent sector, so-called ‘cuckoo funds’ will be the biggest driver of the growth in apartments, according to Goodbody’s ‘BER Tracker’ report.

Without these ‘cuckoo funds’, fewer apartments would be built, according to the report.

“Without this investment, it is likely that the output in the [apartment] sector would be much lower in the coming period due to viability and funding constraints,” said Dermot O’Leary, chief economist at Goodbody.

The selling of homes to ‘cuckoo funds’, which then rent them out en masse, has become increasingly common in this country as the housing crisis continues to spiral.

Critics say it deprives aspiring home-buyers of a chance to buy a home, in the way that cuckoos elbow fledgling birds from their nest.

Criticism has come from as high as the United Nations, which recently accused the Government of facilitating the “financialisation of housing” through preferential tax laws and through weak tenant protections, among other measures.

Overall, houses remain the most common form of residential unit being built.

As apartments represent fewer than one in five residential units completed during the three months, the proportion of output coming from this type of residential property remains small. In addition, the growth in apartment building is coming from a very low base.

“The apartment growth rate is coming from a low level, as Ireland has the lowest proportion of apartments in its housing stock out of any country in Europe,” Mr O’Leary said.

New figures from Goodbody show that 2,358 housing units were built in the first three months of this year.

This represents an increase of 16pc year-on-year, the slowest level of growth since 2013, when Goodbody began its ‘BER Tracker’ series.

Overall, there were 4,255 residential units completed in Ireland in the three month period, up 22pc year-on-year.

Completions of residential units in housing estates continued to account for more than half of the output.

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24 Apr 2019

EU debt levels up in 2018 but debt-to-GDP ratio down

EU debt levels up in 2018 but debt-to-GDP ratio down

Government debt levels rose in the European Union last year, according to Eurostat, but economic expansion in the region pushed the overall debt-to-GDP ratio down.

The countries that use the euro had a combined debt of €9.86 trillion in 2018, up €99 billion (1%) year-on-year. Meanwhile, in the wider European Union, debt levels rose €135.5 billion (1.1%) to €12.7 trillion.

However rising activity meant that debt made up a smaller portion of the region’s economic value.

The EU’s debt-to-GDP ratio stood at 80% last year, down from 81.7% in 2017. In the euro area the ratio was 85.1%, down two percentage points year-on-year.

According to Eurostat the EU member state with the lowest debt-to-GDP ratio last year was Estonia at 8.4%. The highest was recorded in Greece, which saw its ratio rise almost five percentage points to 181.1%.

Last year Ireland’s national debt rose by almost €5 billion to €206.2 billion, however the country’s debt-to-GDP ratio fell 3.7 percentage points to 64.8%.

Eurostat said that 13 countries reported a budget surplus last year, while Ireland reported a balanced budget.

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24 Apr 2019

Less than half of all employees have a private pension – CSO

Less than half of all employees have a private pension – CSO

Less than half of all employees in Ireland were saving towards a pension last year, according to the Central Statistics Office.

Its survey of pension coverage in the third quarter of 2018 found that 47.1% of all people in employment were contributing towards a private pension.

That is up 0.4 percentage points on the same period of 2015.

When pension coverage from previous employments, as well as deferred pensions and pensions in draw-down mode, are included the ratio of those covered rose to 56.3%.

The CSO found that just 16.3% of people aged 20-24 were contributing to a pension, compared to almost 71% of workers aged 45-54.

Meanwhile the data shows that more than half of all self-employed people had pension coverage.

The Irish Congress of Trade Unions said the figures highlighted the need for pension auto-enrolment as part of a wider reform of the system in Ireland.

“Tax relief has failed as a policy instrument for encouraging low and middle-income earners to save enough towards a financially secure retirement, and there is no legal obligation on an employer to provide or contribute to a pension scheme for employees,” said ICTU’s social policy officer Dr Laura Bambrick.

“As the State pension is paid at a flat-rate, rather than earnings-related, workers without retirement savings are exposed to a significant drop in their living standards in old age.”

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24 Apr 2019

Housing completions up by over a fifth in first three months

Housing completions up by over a fifth in first three months

Housing completions were up by over a fifth in the first three months of 2019, according to Goodbody’s Housebuilding Tracker.

It uses Building Energy Regulation (BER) data to compile its figures.

The official data tracks electricity connection figures.

According to Goodbody’s figures, 4,255 residential units were completed in the first quarter, an increase of 22% over the same period last year.

It says under 2,500 of these were accounted for by housing schemes.

Apartment completions grew by almost two thirds in the first three months, the data shows.

“As we noted in our Q4 Tracker, planning permissions data was pointing to a large increase in apartment output, although the timing is quite uncertain. At 18% of the total, the proportion of output coming from apartments remains quite small,” Goodbody chief economist Dermot O’Leary said.

Dublin and the surrounding counties accounted for over half of the total completions in the period.

Mr O’Leary said the figures for Q1 were in line with its forecasts of 22,000 housing completions for the full year.

Goodbody’s figures pointed to housing supply reaching a nine year high in 2018, but still remains at half of the country’s estimated demand.

It said 18,855 new dwellings were completed in Ireland last year.

23 Apr 2019

Government’s €300m Brexit funding scheme for SMEs opens

Government’s €300m Brexit funding scheme for SMEs opens

Small and medium sized businesses here, as well as farmers, can now apply for loans under the Government’s Future Loan Scheme.

The initiative aims to support strategic long-term investment in the post-Brexit environment where financing options may be restricted.

Money borrowed can be use for a variety of reasons, including investing in assets to increase productivity, setting up new offices, investing in product diversification and investment in the processing and marketing of agricultural products.

In total €300 million is being made available for lending and applications are being accepted from today by the state’s Strategic Banking Corporation of Ireland (SBCI).

A minimum of 40% of the fund will go to agri-food businesses and suppliers.

Borrowers from the fund will be able to access loans of up to €3 million, with a maximum interest rate of 4.5% on loans up to €250,000 and 3.5% on sums above this level.

No collateral is needed for loans under €500,000 and businesses with up to 249 employees can apply.

AIB, Bank of Ireland, Ulster Bank and KBC Bank Ireland will participate in the scheme, with applications for eligibility going through the SBCI.

Permanent TSB is also considering joining the initiative.

“I’m very pleased at the level of interest we have received from finance providers. It is likely that we will have five banks offering the Scheme – which means more choice for Irish businesses,” said Minister for Business, Heather Humphreys.

The European Investment Bank and the European Commission are partners in the scheme.

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23 Apr 2019

Home improvements and energy upgrades drive €2.47 billion spend

Home improvements and energy upgrades drive €2.47 billion spend

Irish homeowners have spent a total of €2.471 billion through the Home Renovation Incentive since its launch in 2013.

The scheme, which concluded at the end of last year, facilitated homeowners in carrying out nearly 150,000 home improvement projects over the last four years.

The projects had an average spend of €16,774 per project.

The Construction Industry Federation said the scheme had provided a huge boost to the local economy and employment in the construction sector.

“At a time of modest growth in the construction industry, the scheme encouraged investment by homeowners, which was good news for construction companies and contractors in the country,” commented Shane Dempsey, Communications Director at the CIF.

Broken down by value, the largest amount of work was carried out completing home extensions (34%), followed by general repair and renovations (25%) and then window replacement (11%) and kitchen replacement (10%).

The scheme was introduced initially in late 2013, but the extension of it to rental properties in late 2014 helped increase the number of homeowners who used the scheme.

But a separate initiative, the Deep Retrofit Pilot scheme – which was devised to upgrade homes to the highest energy efficiency levels – has only seen 214 houses upgraded in 2017 and 2018.

The Sustainable Energy Authority of Ireland (SEAI) administers the Deep Retrofit Pilot scheme on behalf of the Government.

Under the pilot scheme, government funding is available for up to 50% of the total capital and project management costs for homes than achieve an A3 Building Energy Rating (BER) post retrofit.

The Construction Industry Federation said that more needs to be done to promote the Deep Retrofit scheme.

“The current ambitious target of 30,000 homes upgrades a year as set out by the Government in the National Development Plan (NDP), rises to 45,000 homes per year from 2021 onwards,” Mr Dempsey said.

“This initiative has the potential to underpin a sustainable and stable construction industry for the next 25 years,” he added.

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