Morning business news - August 25Monday 25 August 2014 12.34
Ulster Bank says that this year will be the first since 2007 in which exports, consumer spending, and investment will all be growing together, so it has upgraded its forecast for the Irish economy, and says it expects real GDP growth of 3.1%.
This follows other upward revisions earlier this summer from the Central Bank and stockbrokers Davy.
Ulster Bank says the main driver of the stronger outlook is a much improved export performance, helped by the combination of improved growth momentum in Ireland's main trading partners - especially the UK and US - and better trends in the pharma-chem sector as the drag from the patent cliff seems to have eased.
“If we look at the recent trends and outlooks for the UK and US economies I think it’s pretty clear that they face a better couple of years ahead relative to what we’ve just come out of in 2012 and 2013,” said the bank's chief economist Simon Barry.
“Both of those economies are likely to grow by between 2.5% and 3% over the next couple of years, and I think one point of particular encouragement has been the UK economy; that outlook would represent about a two percentage point improvement relative to the recent growth trends that we’ve seen there.”
Mr Barry said one of the main brightspots in the irish economy in the past year has been the improvement in the labour market.
He said Ulster Bank expected employment growth to continue in the coming year – though perhaps not at the same pace as was seen in 2013 – which will be a further boon to the economy.
However Mr Barry said there were still issues with the economy which needed to be addressed.
“If we look at the medium term, I think the balance of risks facing the economy is still tilted to the downside and part of that is because of the high debt levels that are being carried both by the household sector and the private and public sectors more generally,” he said.
“One thing that does offer encouragement in the short term is the fact that some really important consumer fundamentals are now improving and the most important one is the labour market.”
More than 21,600 direct jobs have been created in the food and accommodation sector since VAT was reduced to 9% for tourism-related services - that's according to a report out today from the Restaurants Association of Ireland.
The VAT rate was reduced from 13.5% in July 2011.
The report, using employment figures from the Central Statistics Office, found that 21,633 jobs were created in the food and accommodation sector, and a further 9,951 indirect jobs were created elsewhere in the economy.
Burger King is in talks to buy Tim Hortons, the Canadian doughnut and coffee chain, in a merger that would allow the US fast food restaurant group to relocate its tax base in a so-called inversion deal.
By moving away from the US's high corporate tax rate, companies can cut their tax bill.
Earlier this summer US President Barack Obama branded companies planning tax inversions "corporate deserters".
The talks are advanced, and the two combined would create a consumer business with a market value of about $18bn. It would be the world's third-biggest quick service restaurant company, with about $22bn in system sales and over 18,000 restaurants in 100 countries worldwide.