Morning business news - January 14Monday 14 January 2013 12.56
REGULAR SAVER ALMOST GONE FROM IRISH MARKET - The monthly savings index compiled by Nationwide UK and the ESRI has fallen to its lowest level since April 2010. Of the consumers surveyed over the past month, three out of five now believe that Government policy actively discourages saving. Just under half of those surveyed say they are not saving anything at all. That figure has increased by 15 percentage points from 33 to 48% over the past 12 months.
Brendan Synott, managing director of Nationwide UK, says that recent times has seen a three pronged effect on the savings market - the decline in the deposit rates for most savers, and the new Budget measures to increase DIRT and tax on savings income. ''It is not a good scenario for savings for the moment,'' he states, adding that the poor return on saving is causing apathy. Mr Synott says that Government policy is actively discouraging people from saving as it seeks to rebalance consumer spending and saving. However, he points out that recent retail figures over the key Christmas shopping period were strong. The percentage of people who can save has been declining, Mr Synott says, while their ability to save has also weakened. He states that the regular saver has almost disappeared from the Irish market and that a lump sum culture has appeared.
$1 TRILLION COIN IDEA SHELVED BY WHITE HOUSE AND FED - Should the US Treasury mint a $1 trillion platinum coin to help the country avoid having to raise its public borrowing limit within the next month? It may sound reminiscent of a joke from the Simpsons but in some quarters the suggestion is being taken very seriously indeed. LA-based financial writer Tom Petruno says the US is going to run up against its debt limit - about $16 trillion - by February or March. He explains that this limit is a restriction kept by Congress, who instead of abolishing it, keep raising it and setting new targets. Once the Treasury gets close to that limit, the GOP comes in and demands new Budget cuts. If the US hits the ceiling, it can no longer borrow and in theory, the government shuts down and the US could default on its debts.
Tom Petruno says that now, some people are asking whether US President Barack Obama could use a weapon against the GOP. Giving some background to the coin question, he says that some years ago a law was passed to allow the Treasury to mint platinum coins of any denomination. Legally, the US Treasury could mint a $1 trillion coin , deposit it at the US Federal Reserve and if the Fed recognised that it was worth $1 trillion, the Treasury could draw on that account, pay US bills and keep the country running. The idea has been in the media for some weeks, but on Saturday the While House came out and said no while the Fed also said it was not a good idea. But Mr Petruno says that issue has not gone away with some insisting that it would be a much better idea that seeing the US default on its debts - something that would have huge ramifications for the rest of the world.
MORNING BRIEFS - Fees for those responding to insurance claims made through the Personal Injuries Assessment Board have been cut by 30% from €850 to €600. The cuts were announced by Enterprise Minister Richard Bruton who is now putting pressure on insurance companies to pass any savings on in terms of cuts to premiums.
*** The founder of green cement producer Ecocem believes the cement industry is benefitting from a multi-million euro windfall due to anomalies in the EU's Emissions Trading System. Quoted in this morning's Irish Times Donal O'Riain says carbon credits, allocated to cement firms based on historic levels of production, are being sold for tens of millions because demand has fallen nearly 75% since the peak of the boom. That means, he says, many of the credits are surplus to requirements for the cement industry. He believes the ETS regime should be changed so that the unused credits go to the state rather than industry which he says could generate up to €250m for the exchequer over the next seven years.
*** Dublin hotels were the second best performers in Europe last year according to a report covering 19 European cities produced by PricewaterhouseCoopers. The report ranks Dublin second based on growth of nearly 14% in revenue per average hotel room over the past year, a key measure of success in the hotel industry.