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Brexit - The Urgent Need To Be Prepared

Where to now for Brexit?

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The Swings and Roundabouts

After a period of relative silence on the topic, Brexit has quickly become a hot conversation topic once more in recent weeks as Brexit talks begin to ramp up. Despite the constant chatter, however, there have been no official announcements or updates on what we can expect from a final Brexit decision. Naturally, this has caused an atmosphere of concern and uncertainty, particularly for our own minute island as questions about border issues, and difficulties in trade swarm around us and we remain uncertain about our place in all of this. As we have discussed recently however, many Irish companies appear to be thriving in this uncertainty and beginning the process of protecting their business against any potential fallout. Something we have learned from this continued confusion is that Irish companies show great resilience in the face of adversity and have attempted to learn the lessons enforced by the economic downturn.

Recently, there have been growing concerns about the impact Brexit could have on our already troubled housing sector. We have spoken at length in the past about the housing sector as rents continue to rise and many are being elbowed out of any attempts at gaining a foothold on the property ladder. It was announced this week that the Economic, Social and Research Institute (ESRI) believe that the country should make itself ready for Brexit to have an effect on housing, as they expect private sector construction to drop, encouraging the Government to invest more in social housing. It is also believed that rent increases will continue to spiral, leaving many more families in need of support. As well as the ESRI, the Nevin Economic Research Institute feels that housing issues will fluctuate massively following Brexit and that demand will reach an all-time high. It was reported this week that both bodies will present TDs with their findings on November 20th.

Head of Economics with the ESRI, Kieran McQuinn has stated that the Housing Assistance Payment may become the main income support for private renters in the wake of Brexit:

“If income and employment growth are slower than anticipated due to Brexit, the numbers of families that qualify for HAP over the coming years will likely be higher than currently expected,”

Mr McQuinn also believes that demand may decrease but that this may not have the expected positive implications. Meanwhile, the ERSI have highlighted that mortgage arrears remain an issue in Ireland, and that following Brexit, these arrears may continue to increase.

There is some mild good news on the horizon for prospective buyers, however as Mr McQuinn of ERSI has stated that Brexit may have the effect of slowing the increase of mortgage interests rates, which would in turn finally see some levels of affordability return to the Irish housing market.

Should you have any concerns, queries or require further information on these or any other business and financial matters please don’t hesitate to contact us we are always available to help.

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

Brexit – Still No Clearer

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Hope for the Brexit Best

It goes without saying that even those hiding under a rock with no Wi-Fi signal will by now have heard the word ‘Brexit’ by this point, meaning Britain’s highly controversial exit from the European Union. Brexit has proven to be a much more complex issue than it seemed was earlier anticipated and is now an issue fraught with tension and uncertainty for both Britain and our own little island which is often hidden under the safe shadow of its nearest neighbour.

In reports this week it seems that at this point the very notion of Brexit has become a rather messy one, with no parties having a clear understanding of what the final result will actually be. In this environment of uncertainty and as we rely on the UK so heavily for trade routes and business, it has been a cause for much concern in terms of Irish businesses. Terms like ‘Hard Brexit’ and ‘Soft Brexit’ have been thrown around a lot in recent weeks, but what is becoming apparent is that those who voted for Brexit may not be as in control of their destiny as they anticipated and may not have as much power to decide the terms of the departure. The British government continues to attempt to come to an agreement and create a plan which will be beneficial to the majority. As talks continue to fall apart it becomes increasingly clear that Brexit will not affect Britain in isolation, rather it will have a ripple effect across Europe. Even knowing this, it is easy to become tangled in terminology and speculation.

With this atmosphere of fear and uncertainty it came as somewhat of a surprise to hear our own Taoiseach’s assurances that Ireland needn’t be overly concerned as Brexit looms large over Europe. Taoiseach Leo Varadkar has made an attempt to quash any lingering Irish fears, stating that Ireland is making contingency plans “in the unlikely event of a no-deal hard Brexit”. This may seem like a very relaxed attitude given the uncertainty surrounding Ireland’s position in this but also points to a new level of prosperity in Irish business and a certainty that we can hold our own in the European Union. There are even some whispers that this could be a very positive move for Irish trade and open us up to more opportunities than were available previously. It has however been suggested that it would be unwise for our Taoiseach to say too much in advance as there is no way of knowing the end result at this time.

This statement also shows a level of commitment to ensuring that no hard borders will spring up between the UK and Ireland which could damage Irish trade. This will be a crucial point of contention in the months ahead. As UK politicians battle to seek an alignment of ideals there is very little we can do on our side rather than take the traditional Irish standpoint of ‘prepare for the worst, hope for the best’.

Should you have any queries or require further information on this or any other business or financial matter please don’t hesitate to contact us here at EcovisDCA’s new head office, where as always we will be delighted to help.

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

 

CLEANING THE BREXIT WOUNDS

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We have spoken before about the issues and opportunities that lay ahead for the Irish economy in the wake of Britain’s somewhat shocking Brexit vote results. In the weeks since the vote there has been a continuous atmosphere of uncertainty about all things economic both here and across the water.

 

Goodbody’s recent health check for the third quarter of 2016 shows that Ireland’s economic growth having just about managed to get its feet moving, is due to slow in the next 18 months. This is to be expected however as the view on the Irish economic status becomes increasingly cautious due to our tight links with Britain. It is expected that Brexit will trigger some form of a recession in the UK, primarily related to the uncertainty of the situation and lower spending habits as a result. When or how this would hit Ireland remains to be seen but it is undeniable that it will have a knock on effect to our small island with Goodbody predicting that our domestic demand will fall to 4.2% in 2016 and then lower again to 3.7% in 2017. Goodbody’s chief economist Dermot O’Leary has stated that;

“An imminent UK recession, triggered by Brexit-related uncertainty, is likely to take the gloss off a robust Irish economic performance.”

 

It has also been reported this week that some Irish banks are quite vulnerable to a possible downturn with HSBC claiming that they are enter a period of heightened uncertainty as tax profits fall. Despite making significant progress, Irish banks remain vulnerable to any future financial downturns. Recently, stress tests were conducted throughout Europe in order to ascertain how banks would survive a recession. These tests caused some concern for the Irish economic situation as both AIB and Bank of Ireland fared poorly in these tests as the second and fourth worst performers respectively.

 

Again these seem like grim tidings but it is important to remain open minded as analysts have suggested that weak asset quality and recent losses on bad loans might give good reasoning behind these poor performances and that the exercise did not take into account progressions in the last year and that our high level of overall debt skews these results unfavourably against our banks.

 

There was however an unexpected silver lining in Ireland’s economic situation which came in the form of Ireland’s valiant efforts in the Euros 2016 tournament. The tournament has reportedly send grocery sales skyrocketing with stores such as Supervalu and Dunnes recording a 3.4% and a 6.5% rise in value of sales during the latest period, whilst bargain stores such as Dealz also saw a great surge in sales.

 

It is hoped that the weakened sterling will not cause floods of shoppers to cross the border for bargains as we have seen happen before, and that although there is plenty of uncertainty in the air and the reports are laced with dread, that the Irish economy can level out and perhaps even benefit from this uncertainty as we have seen recently that smaller retailers can flourish in these times.

 

Should you require any help, advice or guidance on your own business or financial matters please don’t hesitate to contact us here at DCA Accountants where we are always more than happy to help.

Manager Index, showing a new push towards caution ahead of the Brexit vote.

Whilst the future and coming negotiations between Britain and the EU will be crucial to Irish interests, we will be reliant on the EU side to maintain the best interests of Ireland. This puts us in an interesting position as much of our business is reliant on the UK. It is hoped that in particular, the Common Travel Area agreement that is in place between the UK and Ireland remains in place as new borders would cause chaos for Irish people working in the UK, as well as making our trade routes increasingly difficult.

It will certainly be a long road of uncertainty ahead for Irish and British businesses, but there is still hope on the horizon and whilst business may not resume as normal for all, new pathways will be forged in the wake of Brexit.

As always if you require any guidance, advice or assistance with your own business or financial matters please don’t hesitate to contact us here at DCA Accountants, let us be the one constant for your business in this time of change.

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY