In his Budget 2019 speech to the Dáil this week, the Minister for Finance and Public Expenditure and Reform, Paschal Donohoe, T.D., announced his intention to bring forward a priority package of measures in the Finance Bill to address certain issues with EII and SURE and to increase its efficiency and effectiveness.

Having taken account of the recommendations contained in the recent review carried out by Indecon Economic Consultants, the Minister intends to:

  • amend the application procedure (EII and (SURE) to a largely self-certification model as is the norm for such schemes. This will address the most significant problem with the current design of the scheme relating to delays in the application process; (under the proposed new arrangements, companies may ask Revenue to confirm that they met the requirements for General Block Exemption Regulation (GBER) compliance);
  • provide for a specific investor eligibility regime for investment in very small enterprises; 
  • include a consolidated and updated version of the current text of Part 16 (EII and SURE) of the Taxes Consolidation Act 1997 in Finance Bill 2018 along with certain technical and operational enhancements to the schemes; and
  • extend the EII and SURE sunset clause to three years from now (end 2021).

This is a priority package to address the main shortcomings identified with the scheme. It is intended that other issues will be addressed in a subsequent Finance Bill so as to ensure that the relief is focussed on those enterprises that need it most and that the rates and quantum of relief are appropriately calibrated.

Further details will be provided upon the publication of the Finance Bill.

Ends

Thursday 11th October 2018

 

  • €3 billion in 12 year green bond raised by the NTMA
  • Low yield 1.399% highlights benefit of the Government policy to balance the books

The Minister for Finance and Public Expenditure and Reform, Paschal Donohoe, T.D. today (Wednesday) welcomed the successful twelve year green bond sale by the NTMA saying it provides a new funding channel for green projects, the aim of which are to mitigate against climate change. This follows on from the approval by Government of the Irish Sovereign Green Bond (ISGB) Framework.

Welcoming the result of the sale of the Green bond, Minister Donohoe stated: ‘The success of today’s inaugural Green bond sale by the NTMA, will broaden the funding base for Ireland’s debt and offers a new funding channel for climate change action, which is a priority for Government.  I congratulate the NTMA for their work in ensuring the success of the launch. The Government is committed to climate action as demonstrated by the fact that one in every five euros identified in Project Ireland 2040 will go towards climate action. This move by the NTMA is another positive step on the road to securing additional funding to address the green agenda’.

Minister for Financial Services and Insurance, Michael D’Arcy TD, added,: ‘Irish Sovereign Green Bonds will help to fund the green projects set out in the National Development Plan which contains €23 billion in direct Exchequer funding for eligible green projects over the next ten years. Green and Sustainable finance is a key priority under the IFS2020 Action plan for 2018 and with this bond, Ireland becomes one of the few countries in Europe that has issued green bonds’.

ENDS

Contact:

Deborah Sweeney – Press Adviser to Minister Donohoe 0868586878

Aidan Murphy, Press Officer, Department of Finance – 085 886 6667

pressoffice@finance.gov.ie

 

Notes for Editors

In September, the National Treasury Management Agency (NTMA) announced plans to issue Ireland’s first Green Bond in the coming months, subject to market conditions.

 

The announcement followed the publication by the NTMA of the Irish Sovereign Green Bond (ISGB) Framework, which was approved by Government.

The ISGB Framework sets out how proceeds from ISGB issuance will be allocated against eligible green projects, which primarily address climate change mitigation and adaptation, clean water and wastewater treatment, counter natural resources depletion and loss of biodiversity, and reduce air pollution.

It also aligns green bond funding with State spending on green projects identified in the National Development Plan. The ISGB Framework also provides for the creation of a reporting mechanism for ISGBs.

 

Green Bonds remain a relatively new feature of the sovereign debt market. In the EU only France, Belgium and Poland have issued Green Bonds to date.

Minister Michael D’Arcy TD, as Minister of State for Financial Services and Insurance, today (Friday) launched a public consultation process to inform the development of a new strategy for the International Financial Services (IFS) sector. Submissions are invited on a number of key questions from interested stakeholders and members of the public who wish to put forward their views and suggestions on a new strategy.

 

The current strategy for Ireland’s International Financial Services (IFS) Sector, IFS2020, was developed as a “whole-of-Government approach” to drive the further growth and development of the IFS sector in Ireland. Since it was launched by the Government in March of 2015, the Strategy has been very successful in terms of increased direct employment in the sector with almost 7,000 jobs created by end-2017, bringing the total number of jobs in the sector to almost 42,000.

 

Commenting on the public consultation, Minister D’Arcy said:

 

Ireland’s dynamic and competitive International Financial Services sector has grown and evolved significantly over the past three decades, thanks in large part to the IFS2020 Strategy and its predecessor strategies, to become a major component of our economy in terms of employment, exports and tax revenues. I secured Government approval earlier this year to begin work on a successor strategy to IFS2020 as International Financial Services are extremely competitive and mobile, and we cannot simply assume future success, particularly in the wake of challenges such as Brexit and the regulatory and tax reforms in the US.

 

My priority as Minister for Financial Services is to ensure that we have a strategy that clearly identifies what actions we must take in order to place the International Financial Services sector on a strong footing for the coming years. It will also detail the co-ordination and implementation arrangements required to ensure Ireland’s continued competitiveness. It is my intention to bring a draft strategy to Government later this year with a view to its publication in early 2019.

 

This consultation is an opportunity for interested stakeholders to contribute to the development of this sector over the medium-term. It will complement and add to inputs received to date through my extensive engagement with key stakeholders in Ireland and overseas.

 

The public consultation document is available here. The closing date for submissions is Thursday 25th October 2018.

 

Submissions can be made directly by email to IFSconsultation@finance.gov.ie or returned by post to: IFS Consultation, Room 3.05, Department of Finance, Government Buildings, Merrion Street, Dublin 2, DO2 R583

 

ENDS

 

Contact:

Aidan Murphy, Press Officer, Department of Finance – 085 886 6667

pressoffice@finance.gov.ie

 

 

Notes for Editors

 

– The online public consultation document can be accessed directly at www.finance.gov.ie and www.IFSireland.com. The closing date for submissions is Thursday 25th October 2018.

 

– Further information on the IFS2020 Strategy including the original IFS2020 Strategy document, annual IFS2020 Action Plans, and quarterly Progress Reports are available here:

https://www.finance.gov.ie/what-we-do/international-financial-services/

  • Today’s Exchequer Returns show that tax receipts in the first nine months of 2018 are broadly on-profile and up almost €1.9 billion (5.2 per cent) year-on-year underpinned by a strong economy;
  • Gross voted expenditure is being managed within expectations, and is up 7.7 per cent in the year, reflecting the Government’s continued commitment to investing in our public services and infrastructure;
  • The Exchequer recorded a deficit of €1,471 million; this compares to a surplus last year of €2,344 million, which includes the impact of the proceeds of the AIB share disposal of €3.4bn, which boosted revenue last year.
  • Minister Donohoe welcome’s the Irish Fiscal Advisory Council’s endorsement of the Department’s economic forecasts

Speaking about the Exchequer figures today (Tuesday) Minister for Finance and Public Expenditure & Reform, Paschal Donohoe T.D., stated: ‘With only three months left in the year, overall tax receipts are in line with forecasts, while expenditure remains within expectations. This means that we are currently on track to meet our fiscal targets for 2018, providing a stable platform for Budget 2019.

Minister Donohoe went on to say that: ‘The White Paper will be published later this week, setting out the expected expenditure and revenue for next year, based on existing policy, prior to any new measures being announced in the Budget. The Exchequer forecast on a post-budgetary basis with be published next week as part of Budget 2019. We are currently on track to meet our fiscal targets for 2018, providing a stable platform for Budget 2019’.

Minister Donohoe also welcomed the endorsement today, by the Irish Fiscal Advisory Council, of his Department’s economic forecasts that underpin the Budget for 2019. The Department is forecasting GDP growth of 7.4 per cent this year, an upward revision of nearly 2 percentage points relative to the Department’s spring forecasts published in the April Stability Programme. The stronger than assumed figures in the first half of the year support this upward revision. For next year, the Department is projecting GDP to increase by 4.2 per cent.

Commenting on the forecasts Minister Donohoe said: ‘The baseline scenario, as set out by my Department, is for continued strong economic growth this year and next.  But we cannot take this for granted, especially in such an uncertain global economic environment.  In terms of the public finances, we must work to eliminate the deficit and reduce our debt – this is what the Government is doing.  We must also continue to boost our competitiveness, including by boosting productivity.  This is why the Government is raising capital spending – to boost productivity, enhance resilience and to invest in our future’.

Note to editors:

Under EU legislation (the ‘two pack’) euro area Member States should have their Budgets based on economic forecasts that have been endorsed by an independent body.  In Ireland, this endorsement function is performed by the Irish Fiscal Advisory Council (IFAC).

Endorsement letter from IFAC Chair is here

Fiscal Monitor and Powerpoint presentation by DoF officials is here

ENDS 

Contact:

Ben Sweeney, Press Officer, Department of Public Expenditure and Reform – 085 806 9313

Aidan Murphy, Press Officer, Department of Finance – 085 886 6667

The Minister for Finance and Public Expenditure and Reform, Paschal Donohoe T.D., today (27, September 2018) published the African Development (Bank and Fund) Bill 2018. The Bill will provide for Ireland’s potential membership of the African Development Bank (AfDB) and the African Development Fund (AfDF).

  • Membership of the AfDB and AfDF would require ratification of international agreements in the form of the Articles Establishing the AfDB, and the Articles Establishing the AfDF. Under the provisions of the Constitution, such ratifications require the approval of the Oireachtas through the enactment of appropriate primary legislation
  • Ireland’s application for AfDB and AfDF membership is primarily informed by the objective to strengthen our ties with the African region.
  • In addition to complementing our existing development relationship in Africa, membership would also be consistent with the priorities set out in the recently launched Global Ireland 2025 Initiative, notably the ambition to double the scope and impact of Ireland’s global footprint across the next 7 years.
  • Membership of the AfDB and AfDF will also provide an opportunity to extend our reach and impact in terms of trade, in particular through enhancing opportunities for Irish companies to secure project contracts.

Commenting on the decision to approve the publication of the Bill, Minister for Finance and Public Expenditure and Reform Paschal Donohoe T.D. stated: ‘I am pleased to announce the publication of the African Development (Bank and Fund) Bill 2018.  This is a key step in advancing Ireland’s membership of the Bank, which will play a significant role in further strengthening our longstanding relationship with Africa’.

ENDS

Note for Editors:

About the African Development Bank (AfDB) Group

Founded in 1963, the African Development Bank (AfDB) Group is a regional multilateral development finance institution established to contribute to the economic development and social progress of African countries.  As the premier development finance institution on the continent, the AfDB’s mission is to help reduce poverty, improve living conditions, and mobilize resources for the continent’s economic and social development. The AfDB headquarters is located in Abidjan, Côte d’Ivoire.

25th September 2018

 

The Minister for Finance and Public Expenditure and Reform, Paschal Donohoe TD, today (Tuesday) announced the appointment of the following four new members to the Credit Union Advisory Committee (CUAC).

  1. Lorraine Corcoran, Director, Afanite
  2. Olive McCarthy, Senior Lecturer in University College Cork (UCC) 
  3. Seamus Newcombe, Chief Executive, Payac Services CLG
  4. Diarmaid O’Keeffe, Head of Audit, EisenAmper Ireland

The Committee advises the Minister in accordance with its mandate under Section 180 of the Credit Union Act 1997. The Committee members will hold office for three years from 1st September 2018 and will join two existing members who were appointed in December 2017.

Commenting on the appointments, Minister Donohoe said: ‘These four new members ensure that the CUAC is well balanced in terms of diversity of experience and expertise which includes academia, business management and financial analysis, and will complement the existing members of the Committee who are Credit Union management. I wish the new Committee members well over the next three years and I am confident that they will make a valuable contribution to the CUAC’s work.’

These four new Members replace three outgoing members of the CUAC:

  • Donal McKillop, Professor of Financial Services in the School of Management at Queens University, Belfast.
  • Denise O’Connell, Partner, Audit and Assurance Services – Grant Thornton.
  • Joe O’Toole, Former Senator. Previously served as General Secretary of INTO and President of ICTU.

The Minister thanked these Members for their hard work, stating: ‘The quality of the work conducted by the CUAC over the last number of years is widely recognised in the Credit Union sector and is a testament to the capabilities and commitment of the CUAC’s members during that period. They have made an important and valuable contribution towards dealing with the challenges facing the Credit Union sector at this time and I wish to thank them for both their expertise and their public service.’

The Minister concluded by saying: ‘The CUAC continues to support the development of the movement into the future and I look forward to receiving regular updates on CUAC’s work going forward. I have requested the committee to focus on business model development as the biggest issue facing the sector and specifically to review barriers to and supports for collaborative efforts as well as SME lending, linking with the outcomes of the Local Public Banking report.’

ENDS

 

 

Background information

The appointment of a CUAC is a statutory requirement under section 180 of the Credit Union Act 1997. Section 180(3) provides that the Minister for Finance may appoint up to seven people to CUAC for such period as the Minister thinks fit.

The Committee’s statutory function is to advise the Minister for Finance and such other persons as the Minister thinks fit regarding:

  • the improvement of the management of credit unions;
  • the protection of the interests of members and creditors of credit unions; and
  • other matters relating to credit unions upon which the Minister, the Central Bank or such other persons as may be specified by the Minister may from time to time seek the advice of the Committee.

The CUAC meets on a monthly basis in the Department, with the Department providing secretariat. It regularly invites credit union stakeholders to meetings to share their views on various topics.

The CUAC has completed a number of research papers including: A Survey of Irish Credit Unions and Viability and Irish Credit Unions.

In June 2016 the CUAC produced a report to review and evaluate the implementation of recommendations of the Commission on Credit Unions. The purpose of the report was to identify recommendations made by the Commission on Credit Unions and to examine their implementation, having regard to their impact on credit unions, and environmental changes that have occurred following publication of the Commission on Credit Unions Report. The report also took into account of the spirit/intention of the Commission, the not-for-profit mandate of credit unions and their volunteer ethos and community focus, while giving due regard to the need to fully protect members’ savings and financial stability. The need for credit unions to develop their business models and grow income in a prudent manner was also considered.

CUAC produced a significant Report providing an in-depth analysis of the sector from a financial perspective and met with a range of stakeholders to ensure a balanced report providing focused and effective recommendations. The report, entitled the Review of the Implementation of the Recommendations in the Commission on Credit Unions Report, was presented to the Minister of Finance on 29 June 2016. On foot of this review an Implementation Group was established to oversee and monitor the implementation of CUAC’s recommendations. The group is chaired by the Department of Finance and consists of one member from each of the representative bodies, one member from the CUAC and a member from the Central Bank.

In December 2017, the CUAC published 3 Policy Papers on: (1) Common Bond, (2) eVoting and (3) Loan Interest Rate Cap.

 

Contact:

Deborah Sweeney [Press Adviser to Minister Donohoe] – 086 858 6878

Aidan Murphy [Press Officer, Department of Finance] – 085 886 6667

Press Office pressoffice@finance.gov.ie – 01 676 0336

Friday 21st September 2018

 

Minister Michael D’Arcy announces speakers for 2019 European Financial Forum at the opening of new TOBAM office

 

Michael D’Arcy TD, Minister for Financial Services, formally announced the initial speaker line-up and themes for the 4th European Financial Forum.

The event, to be opened by An Taoiseach, Leo Varadkar, will take place in Dublin Castle on 13th of February 2019 and will build on the success of previous years.

Speaking at the opening of the French asset management firm TOBAM’s new offices in Dun Laoghaire, Minister D’Arcy noted,

“The European Financial Forum is one of the great successes of the IFS2020 Strategy and has gone from strength to strength since it was launched in 2016. It has become a flagship event on the financial services calendar for the industry and public sector to debate the complex challenges and opportunities facing all financial service stakeholders.”

In addition to a forward-looking debate on the macro-economic outlook for Europe, the US and Asia, the Forum will include a debate on Sustainable Finance, the continued impact of FinTech and Digitalisation, Market Infrastructure and the future of Asset Management.

Minister D’Arcy noted,

“Much of the success of the European Financial Forum is due to the quality of the speakers and we expect this open debate to continue in 2019, a year where the full impact of Brexit on the financial services landscape will begin to be felt.

The Forum is the perfect platform for Ireland to showcase its capability as a location of choice for specialist financial services in a rapidly changing and competitive global industry.”

Initial headline speakers include: President of the Atlanta Federal Reserve, Raphael Bostic, CEO designate of State Street, Ronald O’Hanley, Vice Chair of Bank of America Merrill Lynch, Anne Finucane, plus Martin Shanahan, CEO of IDA Ireland, Governor Philip Lane of the Central Bank of Ireland, and Minister for Finance, Paschal Donohoe TD.

Details of more speakers as well as venue and logistical information are available at https://live.ft.com/Events/European-Financial-Forum2, promotional video available at http://www.ifsireland.com/European-Financial-Forum

 

ENDS

 

Contact:

Aidan Murphy [Press Officer, Department of Finance] – 085 886 6667

Press Office pressoffice@finance.gov.ie – 01 676 0336

Minister for Finance and Public Expenditure & Reform, Paschal Donohoe TD, this evening (Tuesday) laid a report on the Taxation of Vacant Residential Property before Dáil Éireann.

Section 86 of the Finance Act 2017 requires the Minister for Finance to lay a report before Dáil Éireann on the issues relating to making provision in law for a tax on vacant residential property*, the administration and implementation of such a tax, the availability of reliable baseline data and the estimated annual revenue from such a tax.  The Act stipulates that this must be done within nine months of the passing of the Act (i.e., no later than 25th September 2018).

Indecon consultants were accordingly engaged by the Department of Finance to conduct an examination of the

  • potential rationale for this form of taxation;
  • levels and trends in vacancy data;
  • reasons for vacancy and issues re the implementation of a vacancy tax; and
  • alternative options which may exist to reduce the levels of vacant properties

The approach adopted by the consultants involved the following research elements:

  • Analysis of the existing data sources on residential vacancy rates in Ireland;
  • Examination of unpublished empirical information provided on vacancy rates in rent controlled zones;
  • Analysis of data provided by the Revenue Commissioners based on Local Property Tax Returns;
  • Review of submissions from open invitation for stakeholders to input to the review;
  • Survey of auctioneers to gain their insights into prevailing vacancy rates;
  • Examination of local authority initiatives to identify and reduce vacancy levels;
  • New econometric modelling of the determinants of residential vacancy rates;
  • Review of vacant property taxation regimes in other jurisdictions.

Indecon’s report has been duly laid before the Dáil in fulfilment of the statutory requirement.

Recommendations

Six recommendations are made in the report.

1. Indecon does not recommend the introduction of a residential vacant property tax at this time as it does not believe it would be an effective response to deal with the housing shortages. Indecon however recommends this should be kept under review.
2. In the event that a vacant property tax is introduced at some stage in the future, careful consideration is required to design the appropriate criteria for the implementation of such a tax.
3. Properties vacated by owners due to illness who rent vacant properties should be exempt from the current Local Property Tax.
4. Enhanced evidence should be collected to monitor movements in the level of vacancies of residential properties.
5. A major programme of compulsory purchase orders should be urgently activated on suitable residential vacant properties.
6. Consideration should be given to introducing a time limited differential rate of capital gains tax for long term vacant residential properties.

Minister Donohoe said: ‘This report arises from an amendment I tabled to Finance Bill 2017, which required me to lay a report on this topic before the Dáil no later than 25th September. Before proceeding to introduce a tax of this nature, it was vital that we have a sound understanding of the extent, locations and characteristics of long-term vacant dwellings, and the reasons why they are currently vacant’.

“In their report, Indecon is not recommending the introduction of a residential vacant property tax at this time as they do not believe it would be an effective response to deal with the housing shortage. They do however recommend that this is kept under review.

“It is also Indecon’s view is that the very low vacancy rates in the areas of greatest demand for housing, indicate that the potential for a vacant property tax to increase housing supply is very limited and could represent a distraction from the need to significantly accelerate the building of new social housing, affordable housing and the facilitation of other housing supply, which the Government has underway. I will now examine the report and its recommendations, in conjunction with relevant Departments and will make my views known then.” 

ENDS

Tuesday,18th September 2018

Notes to Editors

The primary objective of a vacant residential property tax would be to increase the supply of homes for rent or purchase to meet demand rather than increasing tax revenues. In that context the Minister considered it was important that we have a sound understanding of the quantity, locations and characteristics of long term vacant dwellings, and the reasons why they are currently vacant. The Minister also considered that we need to ensure that any vacant dwelling taxation measure is capable of effective implementation and that it avoids unintended consequences, such as perhaps properties being deliberately left to become derelict so as to avoid a vacant home tax. 

The two main sources of information on vacancy rates are the CSO data based on the Census and GeoDirectory data. These two sources appear to suggest very different estimates of vacancy levels. The reasons for the differences are in part due to differences in methodologies and definitions of vacancies. 

The issue of housing supply and demand imbalance is particularly relevant in the Rent Pressure Zones. There are 21 Local Electoral Areas which have been designated as Rent Pressure Zones (RPZ). Vacancy rates in the RPZs in 2016 were 61% lower than for non-RPZ areas. The evidence shows that vacancy rates have been falling faster in RPZs than the national average.

A key policy focus of any potential vacant property tax would be to target properties which are vacant on a medium to longer term basis rather than the units which are vacant on a short-term basis. The prevalence of medium/ longer term vacant dwellings is therefore critical in assessing the merits and potential impact of a vacant property tax. New analysis completed for this study provides evidence on residential dwellings which suggests very low levels of long term vacancy.

ENDS

 

The Minister for Finance and Public Expenditure and Reform, Paschal Donohoe TD, on behalf of the Government, confirms that the full recovery of the alleged State Aid from Apple has been completed. Over the course of Q2 and Q3 2018, Apple deposited c. €14.3 billion into the Escrow Fund which represents the full recovery of the alleged State Aid of c. €13.1 billion plus EU interest of c. €1.2 billion.

The full recovery of the alleged State Aid is a significant milestone and is in line with the commitment given earlier in the year that the alleged State Aid would be recovered by end Q3 2018.

Notwithstanding the fact that the Government does not accept the Commission’s analysis in the Apple State Aid decision and have lodged an appeal with the European Courts, the collection of the alleged State Aid from Apple demonstrates that it was always the Government’s intention to comply with its legal obligations.

Speaking today Minister Donohoe said: ‘While the Government fundamentally disagrees with the Commission’s analysis in the Apple State Aid decision and is seeking an annulment of that decision in the European Courts, as committed members of the European Union, we have always confirmed that we would recover the alleged State aid.  We have demonstrated this with the recovery of the alleged State Aid which will be held in the Escrow Fund pending the outcome of the appeal process before the European Courts’. 

“This is the largest State Aid recovery at c. €14.3 billion and one of the largest funds of its kind to be established. It has taken time to establish the infrastructure and legal framework around the Escrow Fund but this was essential to protect the interests of all parties to the agreement.”

 

ENDS

Notes to editors

Recovery of alleged State Aid

  1. The State has recovered the alleged State Aid from Apple. The total amount is €14.285 billion (which is the principal amount and relevant EU interest). The final payment was made in early September.
  2. There has been continuous and extensive engagement with the Commission Services throughout the recovery process, including in relation to agreeing the amount of the alleged State Aid and the relevant EU interest.
  3. The alleged State Aid has been placed into an Escrow Fund with the proceeds being released only when there has been a final determination in the European Courts over the validity of the Commission’s Decision.
  4. Notwithstanding the appeal in the Apple State Aid case and the difference in view between Ireland and the Commission on the issue, the Government has always been committed to complying with the binding legal obligations the Commission’s Final Decision places on Ireland. 
  5. Significant developments during 2018:
  • On 7 March 2018, the Department of Finance confirmed that the Bank of New York Mellon, London Branch, was selected as preferred tenderer for the provision of escrow agency and custodian services following a competitive tender process.
  • On 23 March 2018, the Department of Finance confirmed that Amundi, BlackRock Investment Management (UK) Limited and Goldman Sachs Asset Management International were selected as preferred tenderers for the provision of investment management services.
  • On 24 April 2018, the Minister for Finance confirmed that the Escrow Framework Deed, which sets out the detailed legal agreement regarding the recovery of the alleged State Aid was signed by the Minister and Apple.  
  • On 18 May 2018, the Minister for Finance confirmed that the collection of the alleged State Aid had commenced.

Infringement proceedings

6. In October 2017, the European Commission announced the intention to launch infringement proceedings against Ireland over the recovery of the alleged Apple State Aid.  As recovery of the alleged State Aid has now been effected, it is now hoped that these proceedings will be withdrawn by the Commission. The Irish Government is in discussion with the Commission in respect of this. 

Appeal on State Aid case

7. The Government profoundly disagrees with the Commission’s analysis in the Apple State Aid case. An appeal is therefore being brought before the European Courts in the form of an application to the General Court of the European Union (GCEU), asking it to annul the Decision of the Commission.

8. The case has been granted priority status and is progressing through the various stages of private written proceedings before the GCEU. It is at the discretion of the Court to determine if there will be oral proceedings, either in public or in private.

9. It will likely be several years before the matter is ultimately settled by the European Courts.

The Minister for Finance and Public Expenditure and Reform, Paschal Donohoe TD, is in Belfast today (Monday) where he will have a number of meetings.

The Minister will have a round table meeting with sectoral and business representatives including from Retail NI, the Confederation of British Industries, the Irish Congress of Trade Unions and Manufacturing NI to discuss their concerns and plans for Brexit. Minister Donohoe will also address the NI Chamber of Commerce.  

Following this, Minister Donohoe will visit a PEACE-funded project: Journeys. The PEACE and INTERREG programmes are managed by the Special EU Programmes Body – one of the North South bodies established under the Good Friday Agreement. While there the Minister will meet with young people from diverse communities across Belfast, Cavan and Monaghan, who have been disadvantaged, excluded or marginalised and are now engaged in the programme.

Speaking from Belfast, Minister Donohoe said: ‘My visit to Belfast is an important opportunity to engage with stakeholders in Northern Ireland in relation to their concerns on Brexit, as well as to set out the Government’s ongoing work to prepare for the departure of the UK from the European Union’.

“It is also a valuable chance for me to witness again at first-hand how EU funding under the PEACE IV programme is being utilised and maximised to the benefit of those who need it most. I am pleased that the European Commission has now proposed a special new PEACE PLUS programme to build on and continue the work of successive PEACE and INTERREG programmes post-2020.”


Ends

 

Contact:

Deborah Sweeney [Press Adviser to Minister Donohoe] – 086 858 6878

Aidan Murphy [Press Officer, Department of Finance] – 085 886 6667

Press Office pressoffice@finance.gov.ie – 01 676 0336

  • In the second quarter of this year, real GDP rose by 2.5 per cent relative to the previous quarter; as a result the level of economic activity was 9.0 per cent higher than the second quarter last year.
  • Modified domestic demand – a better proxy for the domestic economy – grew by 6.3 per cent year-on-year.
  • The average annual growth rate in the first half of this year was over 9 per cent.

The CSO today (Thursday) published national accounts estimates for the second quarter of this year. Commenting on the figures, Minister for Finance and Public Expenditure & Reform, Paschal Donohoe T.D. said:

“Today’s figures are very strong showing that the Irish economy grew by 9.0 per cent in annual terms in the second quarter of this year. While the headline GDP figures can overstate activity in the Irish economy, domestic measures such as modified domestic demand clearly indicate that the economy continues to perform strongly.

In particular, I note the acceleration in consumption growth to almost 4½ per cent and continued double-digit growth in building and construction investment.

The strength of the domestic economy is also reflected in full-time employment growth of over 4 per cent as well as tax receipts to end-August which increased by over 5 per cent compared to the same period last year.

My Department forecast real GDP growth of 5.6 per cent for this year in the Summer Economic Statement. The next set of macroeconomic projections will be published with the Budget in mid-October.

While the economic situation remains favourable at present we must remain vigilant. The Irish economy faces a number of significant risks including the potential fallout from Brexit, increasing trade protectionism and potential overheating as the economy approaches full employment. Careful management of the public finances is needed in order to chart our way forward through the uncertain times ahead.”

Ends

Contact:

Deborah Sweeney [Press Adviser to Minister Donohoe] – 086 858 6878

Aidan Murphy [Press Officer, Department of Finance] – 085 886 6667

Press Office pressoffice@finance.gov.ie – 01 676 0336

Population Ageing and the Public Finances

  • Demographic shift expected in Ireland over medium- to long- term
  • Ratio of retirees to workers set to more than double by 2050
  • Growth rate of the Irish economy set to slow over the coming decades
  • Reducing high level of public indebtedness could increase capacity of public finances to absorb additional costs
  • Policies that increase employment rate of older workers and those of working age could help to mitigate the impact of population ageing on the public finances

 

The Minister for Finance and Public Expenditure and Reform, Paschal Donohoe TD, today (Sunday) released the findings of a report carried out by his Department entitled Population Ageing and the Public Finances in Ireland. The purpose of the Report is to highlight the likely economic and budgetary impacts of demographic change in Ireland in the coming years.  While Ireland’s demographic structure is relatively favourable at present, shifting demographics in the coming decades could lead to a slower pace of economic growth, putting additional pressure on the public finances.

 

Analysis in the report suggests that while there are currently around 5 persons of working age for each person aged 65 and over in Ireland, the equivalent figure will be just over 2 by 2050. This shift in the age profile of the population will involve increased spending in demographically-sensitive components of public expenditure, such as pensions and healthcare. Age-related expenditure is projected to increase by 6.5 percentage points of GNI* by 2050 (and also by 6.5 percentage points of GNI* by 2070).

 

In addition to the associated expenditure pressures, the ageing of the population is expected to reduce the growth rate of the economy to just under 2 per cent per annum over the 2020-2050 period, making it more difficult for the public finances to absorb the increase in age-related spending. As stated in the report on public debt which was published last week by the Department, current high level of public indebtedness – the debt-to-GNI* ratio is in excess of 110 per cent –weighs on the capacity of the public finances in Ireland to absorb these additional costs. Analysis in the report shows that in the absence of further policy responses, population ageing would increase the debt-to-GNI* ratio by approximately 50 percentage points by 2070.

 

Commenting on the analysis, the Minister for Finance and Public Expenditure and Reform, Paschal Donohoe said: ‘The analysis published today by my Department clearly illustrates the additional pressure that the impending shift in the demographic profile of the population could place on the public finances. In addition to the associated expenditure pressures, a reduced economic growth rate would add pose additional challenges for the public finances of the State’.

 

“This report provides valuable insight and signals the need to ensure that the right policy levers are in place to help us deal with the demographic changes that lie ahead. A range of policy reforms, such as increases in the State Pension age, have already been implemented to mitigate against the costs associated with population ageing. However, additional measures including fiscal restraint in non-age-related expenditure, such as our debt servicing costs and  , will be necessary to safeguard the sustainability of the public finances. This is why the Government is intent on reducing the debt burden, building up fiscal buffers and ensuring the public finances are sound. Balancing the books over the cycle is also crucial, which is a primary focus of Government.”

 

Ends

 

Note to Editors:

  • The report builds on work undertaken by the Department of Finance in conjunction with other Finance Ministries in the European Union, together with the European Commission.
  • For the purpose of the analysis in this document, the working age population is defined as the population aged 15-64 and the old-age population is defined as the population aged 65 and over.  This in line with standard international definitions, although it is recognised inter alia that many individuals continue working beyond their 65th
  • In this report, age-related expenditure is defined as the sum of public expenditure on pensions, healthcare, long-term care, education and unemployment benefits.

 

Contact:

Deborah Sweeney [Press Adviser to Minister Donohoe] – 086 858 6878

Aidan Murphy [Press Officer, Department of Finance] – 085 886 6667

Press Office pressoffice@finance.gov.ie – 01 676 0336

The Minister for Finance and Public Expenditure & Reform, Paschal Donohoe T.D., has today (Wednesday) published Ireland’s Corporation Tax Roadmap. 

The Roadmap takes stock of the changing international tax environment, outlines the actions Ireland has taken to date and the further actions that will be taken over the coming years.

The Roadmap includes consideration of responses received to the Department’s consultation on the recommendations made in the Review of Ireland’s Corporation Tax Code, undertaken by Mr Seamus Coffey, and the implementation of the Anti-Tax Avoidance Directives.

The Roadmap outlines the significant further action that Ireland is taking as part of international tax reform efforts, including commitments that:

  • Legislation will be introduced in Finance Bill 2018 to introduce Controlled Foreign Company rules with effect from 1st January 2019;
  • The final legislative steps required to allow Ireland to complete the ratification of the BEPS Multilateral Instrument will be taken in Finance Bill 2018;
  • Legislation will be introduced in Finance Bill 2019 to introduce anti-hybrid rules, update and expand Ireland’s transfer pricing rules and fully implement the 6th EU Directive on Administrative Co-operation.

The Roadmap also flags the intention to hold further consultation processes on a range of issues including the technical design of complex ATAD measures and the Coffey Review recommendation to consider the potential impacts of moving to a territorial tax regime.

Publishing the Review today, Minister Donohoe said: ‘I am delighted to publish this comprehensive Roadmap which sets out a direction of travel for corporation tax reform over the coming years. The Roadmap highlights the significant actions that Ireland has taken and the actions we will continue to take to ensure that our corporation tax regime is transparent, sustainable and legitimate’.

‘It is vital to have a consensus-based, globally agreed approach to international tax.  Tax rules need to continue evolve to match the modern world, and that evolution can best take place through international agreement at the OECD and the BEPS Inclusive Framework.  Ireland will continue to foster economic activity in Ireland, the EU and beyond by adapting and evolving our corporate tax regime while maintaining our key 12.5% rate. This Roadmap demonstrates my, the Government’s, commitment to continuing the significant progress already made to strengthen Ireland’s corporation tax system now and in the years to come.’ 

ENDS

Notes to Editors:

Wednesday, 5th September 2018

Corporation Tax Roadmap

 

The Roadmap outlines the range of commitments for further action:

  1. Legislation will be introduced in Finance Bill 2018 to introduce Controlled Foreign Company rules with effect from 1 January 2019.
  1. Review of Ireland’s general Anti-Abuse Rule to ensure that it is consistent with Anti-Tax Avoidance Directive.
  1. The final legislative steps required to allow Ireland to complete the ratification of the BEPS Multilateral Instrument will be taken in Finance Bill 2018.
  1. Legislation to amend Ireland’s exit tax will be introduced no later than Finance Bill 2019.
  1. Legislation will be introduced in a subsequent Finance Bill to introduce an interest limitation ratio. The timing of this legislation is yet to be determined.
  1. Legislation will be introduced in Finance Bill 2019 to implement anti-hybrid rules and further legislation will be introduced in a subsequent Finance Bill to introduce reverse-hybrid rules.
  1. Legislation will be introduced in Finance Bill 2019 to updated Ireland’s transfer pricing rules.
  1. Legislation will be introduced in Finance Bill 2019 to ensure that Ireland fully implements the DAC6 Directive on the mandatory disclosure of tax planning arrangements.
  1. Regulations will be issued before July 2019 to implement the Dispute Resolution Mechanism Directive and provide Irish taxpayers with access to this new arbitration framework.
  1. The Taxation and Certain Other Matters (International Mutual Assistance) Bill will be published
  1. It is intended that a public consultation will be launched in early 2019, seeking input on the alternative options of moving to a territorial regime or conducting a substantial review and simplification of the rules for the computation of double tax relief. 

The key actions that have been taken by Ireland over the last five years are: 

  1. Changes were made to Ireland’s corporate tax residence rules in Finance (No.2) Act 2013 to prevent Irish incorporated companies from being stateless for tax purposes and in Finance Act 2014 to shut down known structures (such as the so-called ‘Double Irish’) which were designed to exploit gaps in US anti-avoidance rules. Action was taken by Ireland in the absence of US tax reform. US reform has subsequently taken place in a manner which should prevent any similar structures from being effective in avoiding US tax. 
  1. Ireland has continuously made changes to ensure we are constantly up to date with best practice on tax transparency and exchange of information. Ireland is one of only 22 jurisdictions to have been found to be fully compliant with new international best practice by the Global Forum on Tax Transparency and Exchange of Information.  Ireland was an early adopter of the OECD Common Reporting Standard on Exchange of Financial Account Information, and in 2012 Ireland became the 4th country in the world to sign a FATCA Agreement with the USA.
  1. Ireland commissioned and published a Spillover Analysis, carried out by the independent International Bureau of Fiscal Documentation (IBFD), to examine the impact of our corporation tax regime on developing countries. 
  1. Ireland introduced Country by Country Reporting in Finance Act 2015 and subsequently agreed a Directive (DAC4) to ensure a consistent approach on CbCR across the EU.
  1. Ireland agreed and have fully implemented an EU Directive (DAC 3) to provide for the automatic exchange of information on advance cross-border tax rulings and advance pricing arrangements among all Member States. Ireland is also fully compliant with the BEPS Action 5 requirements on exchange of this taxpayer information.
  1. Ireland was among the group of countries to sign the BEPS multilateral instrument at the first possible opportunity. This will see the majority of Ireland’s tax treaties updated to be BEPS compliant.
  1. Ireland agreed two Anti-Tax Avoidance Directives (ATADs) with our fellow EU Member States in 2016 and 2017. The Anti-Tax Avoidance Directives represent binding commitments to implement 3 significant BEPS recommendations into Irish law as well as two additional anti-avoidance measures. This Roadmap sets out the planned implementation of the ATAD measures into Irish law, per the agreed schedule.
  1. Ireland agreed an EU Directive (DAC5) to ensure access for tax administrations to information about beneficial owners of companies and other information held for anti-money laundering purposes. Ireland has made necessary tax regulations to ensure Revenue can access and exchange information on beneficial ownership of companies.  Further work is ongoing on implementing the relevant anti-money laundering Directives. 
  1. Ireland agreed an EU Directive (DAC6) to introduce a common mandatory reporting regime for tax advisers and companies where transactions are entered into that meet certain hallmarks. Ireland was one of only three EU Member States to already have a mandatory disclosure regime in place prior to the agreement of the Directive. 
  1. Ireland agreed the Directive on Dispute Resolution Mechanisms to extend the availability of arbitration when two Member States disagree on how, and where, a taxpayer should be taxed.
  1. Ireland agreed the first ever EU list of non-cooperative tax jurisdictions with our fellow Member States. The list has been extremely successful in encouraging third countries to commit to implementing international tax best practices.
  1. Ireland commissioned an independent expert, Mr. Seamus Coffey, to carry out a thorough review of our Corporation Tax Code and to make recommendations for any reforms that may be needed. This review was published in September 2017.

 

  • An Exchequer deficit of €1,818 million was recorded to end August 2018. This compares to a surplus of €1,818 million in the same period last year. When adjusted for the impact of the AIB share sale in 2017, the Exchequer balance shows an underlying annual decrease of €202 million. This decline in the Exchequer balance was primarily due to an increase in expenditure, albeit somewhat offset by increased tax revenue.
  • Tax revenues of €32,421 million were collected to end-August 2018, an annual increase of 5.1% or €1,563 million on end-August 2017. This was broadly in line with profile, down just 0.3% or €100 million.
  • Overall, total net voted expenditure to end-August 2018, at €31,580 million, was 0.7% or €229 million below profile, and up €2,427 million or 8.3% in year-on-year terms.

 

Fiscal_Monitor_End August 2018

  • Public debt in Ireland stands at over €200 billion;
  • Outstanding public debt amounts to €42,000 for every person resident in the State, one of the highest in the developed world;
  • By building up fiscal buffers we will be well placed to support the economy in time of need;
  • Reducing public indebtedness must remain a priority.

The Department of Finance today (Monday) published its Annual Report on Public Debt in Ireland 2018, the purpose of which is to provide a comprehensive diagnosis of public debt dynamics in Ireland.  The analysis shows that public indebtedness remains high in Ireland, in both historical and international contexts.  At the end of last year, public indebtedness amounted to €201 billion; on a per capita basis this is the third highest in the developed world.

 

While the debt ratio continues to fall, this is due to strong income growth.  In an increasingly uncertain world, it is important to reduce debt in order to ensure that the economy is well placed to withstand any future shocks.

 

The report highlights that structural aspects of Ireland’s public debt are relatively healthy.  Active debt management has reduced the interest bill and lengthened maturity profiles.  Having said that, the annual interest bill amounts to €5.8 billion – €1 of every €13 spent by the State is absorbed by interest payments.  Reducing public debt would free-up some of these resources that could be deployed more usefully in other areas (those areas that bring lasting benefits to people).

 

Welcoming the analysis, the Minister for Finance and Public Expenditure and Reform, Paschal Donohoe T.D., said: ‘The analysis produced by my Department clearly demonstrates the importance of continued prudent management of the public finances.  We are making solid progress in getting people back to work – employment levels are now at their highest ever – and we are implementing policies that deliver steady, sustainable improvements in living standards.  However, at over €200 billion at the end of last year, it is crucial that we continue to stabilise the level of debt in Ireland and, subsequently, put it on a downward trajectory – this has been and will continue to be a key priority for Government.  By reducing the burden of debt we will minimise the exposure of, and risks to, the economy.  I have outlined on a number of occasions the need to build up fiscal buffers that can be deployed to support the economy in the event of a shock’.

 

To address the burden of public debt in Ireland, the report makes a number of suggestions, including:

  • using windfall gains to reduce the nominal debt;
  • continuing to enhance credibility in order to minimise refinancing costs;
  • implementing structural reforms that boost the growth potential of the economy.

 

In terms of policy, Minister Donohoe said: ‘The Government’s objective as set out in the Summer Economic Statement is to balance the budget over the economic cycle and to use windfall receipts for debt reduction.  Our budgetary approach is anchored in steady, incremental improvements in public services underpinned by sustainable revenue streams.  We will achieve the medium term goal of a balanced budget next year.  This, as well as the establishment of a Rainy Day Fund, will help to build up the resilience of the economy and prepare us for the challenges ahead’.

 

Ends

 

Note to Editors:

  • This is the second Annual report on public debt in Ireland published by the Department of Finance.
  • There is no legal requirement to produce this report – it is produced by the Economics Division in order to enhance transparency and improve awareness of the issues raised.
  • Debt-to-GNI* peaked at 166 per cent in 2012 and was 111 per cent at the end of last year.
  • On a per capita basis, only in the US and Japan is debt higher than in Ireland.
  • The analysis in this paper looks only at public debt – it does not focus on household or corporate debt.


Contact:

Deborah Sweeney, Press Adviser to Minister Donohoe – 086 858 6878

Aidan Murphy, Press Officer, Department of Finance – 085 886 6667

pressoffice@finance.gov.ie

The Cost of Insurance Working Group – chaired by the Minister of State for Financial Services and Insurance, Michael D’Arcy TD – has published its Sixth Progress Update.  This quarterly report is the second to provide details on the implementation of both the Report on the Cost of Employer and Public Liability Insurance and the Report on the Cost of Motor Insurance.  Both of these reports and all six quarterly progress updates are available on the Department’s website.

In terms of actions to be completed by the end of Q2 2018, a total of 71 separate applicable deadlines were set out within the Action Plans of the two Reports.  Of these, 58 relate to actions which have now been completed, equating to an 82% ‘strike rate’.  While the goal is to improve upon this completion rate, it is important to consider the ground that both reports are laying for a more transparent and fairer insurance environment going forward.

For instance, much progress has been made on putting in place a fully-functioning National Claims Information Database with the recently published Central Bank (National Claims Information Database) Bill 2018.  The enactment of this Bill will provide much greater insight into, in particular, the identification of settlement channel information which should lead to a greater consistency in award levels and a greater use of the Personal Injuries Assessment Board.  This would result in a more stable claims environment, in turn positively influencing the price of insurance paid by consumers.

In addition, the second and third Reports of the Personal Injuries Commission, which have merged into one substantive report, will go to Cabinet for approval to publish in September, and the implementation of its key recommendations should impact upon the awarding of personal injury damages in the future.

Another area of significant progress has been the markedly enhanced levels of engagement and cooperation between An Garda Síochána and the insurance industry since the creation of the Fraud Roundtable.  This has led not only to the agreement of a protocol between the Gardaí and insurers in relation to the reporting of suspected fraudulent personal injury claims but also a commitment for the Garda National Economic Crime Bureau and Insurance Ireland’s Anti-Fraud Forum to meet on a regular basis in order to discuss and act upon current and ongoing relevant issues in this area.

The Working Group and associated sub-groups have been continuing to meet regularly in order to ensure the focus remains fixed upon the timely implementation of all of the recommendations of the Report on the Cost of Motor Insurance and the Report on the Cost of Employer and Public Liability Insurance.  Minister D’Arcy has re-emphasised that this is “to ensure that consumers and businesses can obtain insurance cover at a reasonable and fair price, and that by introducing greater transparency into the market we can remove the volatility that we have witnessed over the last number of years.”

In this regard, it should be noted that the most recent CSO/CPI data (for July 2018) indicates that private motor insurance premiums have decreased by over 20% since peaking in July 2016.  While it is accepted that premiums are still at a very high level for many people, such statistics indicate at least a greater degree of stability in the market on an overall basis.

ENDS

 

Contact:

Aidan Murphy, Press Officer – 085 886 6667 / pressoffice@finance.gov.ie

 

 

Notes to Editors:

The Cost of Insurance Working Group was initially chaired by the Minister of State at the Department of Finance, Mr Eoghan Murphy T.D.  However, following his appointment as Minister for Housing, Planning and Local Government, he was replaced as Chair by Minister of State for Financial Services and Insurance, Mr Michael D’Arcy T.D.  The Working Group is comprised of representatives from the Department of Finance, the Department of Business, Enterprise and Innovation, the Department of Justice and Equality, the Central Bank of Ireland, the State Claims Agency, and the Personal Injuries Assessment Board.

The Report on the Cost of Motor Insurance was published in January 2017 and made 33 recommendations with 71 associated actions to be carried out in an agreed timeframe.  The Report on the Cost of Employer and Public Liability Insurance was published in January 2018 and made 15 recommendations with 29 associated actions to be carried out in an agreed timeframe.

There is a commitment in both Reports that the Working Group will prepare quarterly updates on its progress. The first update was published in May 2017, the second in July 2017, the third in October 2017, the fourth in January 2018 and the fifth in May 2018, and all five provided details on how the implementation of the recommendations were progressing, with a particular focus on the action points which were due for completion during the respective quarters – 10 in the first quarter, 17 in the second quarter, five in the third quarter, 14 in the fourth, and 12 in the fifth across the two Action Plans.

This Sixth Progress Update is the second such quarterly report to encompass both the Motor and EL/PL Reports and provides details on how the implementation of the recommendations is progressing, with a particular focus on the 14 actions which were due for completion during Q2 from both Reports.  8 of the 14 actions have been completed.  This consists of two action points from the Motor Report and six from the EL/PL Report.

While six actions which were scheduled for delivery in Q2 2018 have not been fully completed, it is important to note that significant progress has been made in relation to these action points, many of the delays have previously been signalled in earlier quarterly reports, and all efforts will continue to be made to ensure that all of the proposed measures from the two Reports are put in place as soon as possible.  Also, it should be noted that two of the three actions not achieved on time in Q1 2018 have now been accomplished.

The five Q2 2018 Action Points from the Motor Report which have not been fully completed are:

  • Action Points 4 & 6 – these are delayed due to the need for the Central Bank to consult further on this Department’s proposal to include last year’s premium in renewal documentation. This consultation has been published by the Central Bank and closes on September 14th with the aim of completing implementation by the end of this year.
  • Action Point 24 – this action point has not been achieved due to the complex and time consuming nature of developing such a claims database but significant progress has been made with the recent publication of the Central Bank (National Claims Information Database) Bill 2018. It is hoped that this Bill passes through the Houses of the Oireachtas during the autumn session and be enacted by year end.
  • Action Point 46 – a report on the impact of legal and other fees on personal injury awards has not yet been submitted to the CIWG as it is contingent on the establishment of the new Office of the Legal Costs Adjudicators, which is expected to be in place later this year.
  • Action Point 54 – this action point is delayed due to the complexities (e.g. data protection) involved in developing a database to identify fraud.

 

The one outstanding Q2 Action Point from the EL/PL Report relates to the recommendation that consideration be given to training pending the enactment of the Judicial Council Bill and consultation with the Courts Services is ongoing.

 

  • Employment in the second quarter of 2018 increased by 74,100 (3.4 per cent) relative to the same quarter the previous year;
  • Full-time employment increased by 73,000 (4.2 per cent) over the same period – a very positive development;
  • The level of employment is now at its highest level ever.  Employment growth has been recorded in the last 24 consecutive quarters.
  • The increase in employment remains broad based with annual gains across most sectors and regions recorded by the CSO.

Labour Force Survey (LFS) data published today (Tuesday) by the CSO show continued strong momentum in the labour market, with robust jobs growth reported in the second quarter of 2018. This marks the highest level of employment ever within the State. Welcoming the figures, the Minister for Finance and Public Expenditure and Reform, Paschal Donohoe T.D., said: ‘Today’s figures mark a milestone in the journey we have made in recent years in terms of getting people back to work and putting our economy back on an even keel. These figures show that the number of people at work continues to expand, with 74,100 additional jobs created over the year to the second quarter of 2018.  There are now more people at work than ever before, with 2,255,000 people now in employment. This is evidence that the economy is performing well, that Government policy is working and that jobs-rich growth is being generated’.

“We have now seen 24 consecutive quarters of employment growth and crucially, that employment remains broad-based, with annual gains recorded in most sectors and regions. In parallel, unemployment continues to fall, with the unemployment rate reaching 5.9 per cent in July.  Encouragingly, we are also seeing declines in long-term unemployment, which now stands at 2.0 per cent – and the youth unemployment rate, which, while still too high is at 15.4 per cent.

“Behind each of these additional jobs that are being added, is a human story; one of a jobseeker getting back on his/her feet, a household putting another salary on the table at the end of the week or the school-leaver joining the jobs market. It is for all of these reasons that the Government is committed to ensuring that these positive trends in the labour market are maintained. We will continue to implement active labour policies and work to safeguard the gains we have made in competitiveness in recent years to ensure that good, quality jobs continue to be made available for our people.

“With employment at its highest level ever recorded and the economy approaching full-employment we must also be alive to the capacity constraints that may present in some sectors, which could lead to overheating in the economy. As set out in the Summer Economic Statement, the Government is mindful that budgetary policy is not pro-cyclical. We will adopt steady, incremental and sustainable policies that continue to deliver improvements in public services and a robust economy now and into the future.”

Ends

Tuesday, 28th August 2018

Note to Editors:

  • On a seasonally adjusted basis, employment increased by 0.8 per cent (+17,300) to 2,256,500 from the first quarter of 2018.
  • The largest employment increases in the second quarter (in annual terms) were in construction (+17,800) and accommodation and food (+17,300).
  • Peak youth unemployment rate was 33.4 per cent in 2012
  • Peak long-term unemployment rate was 9.8 per cent in 2012.

Minister Donohoe welcomes results which show increases in bank credit approval rates, business turnover and business sentiment

The Department of Finance has today (Monday) published the latest in its series on SME Credit Demand Surveys, which covers the six month period October 2017 – March 2018, the results of which have been welcomed by the Minister for Finace and Public Expenditure and Reform, Paschal Donohoe TD. 

The survey series is currently being conducted by Fitzpatrick Associates in conjunction with Behaviour and Attitudes, on behalf of the Department of Finance.  It is the most comprehensive survey of SME Credit Demand in Ireland, covering over 1,500 respondents through in-depth discussions.  The survey ensures that it captures a full picture of the SME landscape in Ireland, with micro enterprises, small-sized enterprises and medium-sized enterprises accurately represented as per the percentage make-up of SMEs in Ireland.

Survey’s key findings include:

  • There is a significant increase in the numbers of SMEs that believe banks are lending at 61%, up from 45% in March 2017;
  • Positive business sentiment has increased for companies of all sizes with 55% of SMEs expecting the business climate to improve in the next six months – up from 49% in March 2017;
  • The demand for bank credit increased by 6 points year-on-year to 26%, and is up three points from Sept 2017. This represents the first consecutive increase in demand since the series began.  Demand is now on a par with March 2016. Demand had been consistently falling from a high of 40% in March ’13 to its lowest level of 20% in March ’17;
  • For the fifth year in a row, there was an increase in the reported number of companies making a profit, with a growth from 40% in March 2013 to 64% in March 2018.  
  • SME finances also continue to improve with 87% (+3%) of SMEs reporting stable or increased turnover;
  • 45% of all businesses surveyed report increased turnover in the past six months, with 14% reporting a decrease. Of those reporting increased turnover, half report an increase of 10% or more.
  • 88% of applications for credit were approved, which is an increase from 85% on the previous survey wave in Sept 2017;
  • 57% of SMEs believe that Brexit will have a negative effect on their business while 11% believe that it will have a positive impact (up from 9% in March 2017).  32% of SMEs believe it will have no impact on their business.
  • Of those that did not access credit, 89% cited lack of credit requirements as their reason;
  • The average cost of credit on outstanding loans is 5.06%, which represents a slight decrease and is a continuation of a downwards trend.

On the publication of the Survey Minister Donohoe said:  ‘I welcome the results of the latest SME Credit Demand Survey, October 2017 – March 2018, which shows an overall increase in positive business sentiment in Irish SMEs.  It is encouraging that there has been a noticeable increase in the number of respondents that feel that banks are increasing lending.  The survey has also captured that, notwithstanding the uncertainty of Brexit, Irish SMEs are more confident in the continued improvement of the business climate over the next 6 months’. 

“I would like to take this opportunity to sincerely thank all those who took part in this survey, allowing us to gain vital understanding of the Irish SME landscape and the views and perceptions held by them. It is an invaluable resource that allows us to develop, refine and implement policy measures to ensure our indigenous businesses are adequately and well supported.”

SME Credit Demand Survey

 

Note for Editors:

Background of Report

The SME Credit Demand Survey has been conducted biannually since 2011 to monitor trends in access to credit by SMEs.  Please note while the survey is conducted on a 6 monthly basis, for presentation purposes, the report uses year-on-year comparisons.  

The Department has conducted the SME Credit Demand Survey to provide an independent and statistically significant report into the Irish SME landscape and the availability of, and demand for, credit that exists within that sector.   The survey was conducted through a telephone survey covering over 1,500 businesses.  It drew a carefully constructed sample from a large database of SMEs, made repeated calls to ensure a full response and asked factual questions. The full questionnaire is included in the report. The report and previous reports are available on the Department of Finance website at www.finance.gov.ie.

The report, which is published today, presents the results from the SME Credit Demand Survey October 2017 – March 2018.  Conducted by Fitzpatrick Associates in conjunction with Behaviour and Attitudes, all interviews took place between May 21st and June 25th2018.

 

Demand for Bank Finance

26% (+6%) of SMES have applied for bank finance in the past six months, this increase in credit demand is consistent across SMEs of all sizes, to broadly the same extent.

The survey also registers an increase in expected future demand for credit, with 19% of all SMEs expecting to apply for finance in the next six months, up from 13% during the corresponding period in 2017. This increase in expected future demand is driven by small and medium sized, rather than micro, SMEs.

The average reported cost of credit on outstanding loans is 5.06% – a decrease from 5.1% in September 2017. It should be noted that different question wording for cost of credit has been utilised from September 2017. 

 

Application Process

Of those companies that have requested bank finance (26%), business expansion, working capital and new machinery/equipment are the main uses for this finance.

75% of those that applied for bank finance did so formally – down from 80% in March 2017. The main reason given for submitting an informal request is that the business felt there was no need for a formal application, as the request related to a repeat loan or was linked with a personal relationship in the bank.

64% of SMEs whose credit applications were approved have availed of all of the facility, and a further 17% have availed of part of it. However, 19% of SMEs with approved credit applications have not yet availed of the facility, down from 26% in March 2017.

61% (+16%) of all SMEs believe that the banks are currently lending to at least some SMEs, 16% believe they are not, while 23% are unsure.

 

Credit Support Awareness

Of those that applied for credit to a pillar bank, 54% were informed of their right to a review by the Credit Review Office, when don’t knows are excluded 66% of SMEs were informed.

Of those who were refused credit, 38% claimed that they were informed of the right to an internal review, up from 20% in 2017.  N.B. This is based on a very small sample size.

 

The European Union Prospectus Amendment Regulations 2018 were signed by the Minister on 3rd August 2018. These Regulations fulfil Ireland’s obligation to transpose the provisions of the Prospectus Regulation (EU Regulation 2017/1129) that come into effect before 2019 into national law.

 

Note for Editors

A prospectus allows for the provision of information which enables investors to make an informed investment decision, along with rules on the conduct of business and the protection of investors. Europe has a harmonised framework for the preparation and issuance of prospectus as set out in the Prospectus Directive.

 

Since the Prospectus Directive came into effect in 2003, there has been a number of legislative and market developments which means that our prospectus framework will be updated via the Prospectus Regulation (EU Regulation 2017/1129). The new Regulation will repeal and replace our existing framework in July of next year, but certain provisions came into effect in July of this year which the European Union Prospectus Amendment Regulations 2018 address.

The Minister for Finance and Public Expenditure & Reform, Mr Paschal Donohoe TD, wishes to extend his sympathy to the family and friends of the late Sean Cromien, former Secretary General of the Department of Finance who has died.

 

The Minister stated that “Sean Cromien was a distinguished public servant who served in the Department of Finance for many years before becoming Secretary General in 1987. He retired from the Department of Finance in 1994 but remained active in public life including being appointed Director of the National Library. A keen naturalist, he also served as President of Dublin Zoo. He was also elected to the Royal Irish Academy in 2006”.

 

ENDS


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