NEW GOVERNMENT MAY HAVE EXTRA €200M TO SPEND - A new Department of Finance forecast finds the next government may have some €700 million at its disposal for tax and spending measures in 2017, which is about €200 million more than foreseen previously.
Exactly two months after the election, the prospect of more money becoming available may ease the task of forming a government, says the Irish Times. The development comes as health service spending runs ahead of target, compromising potential for tax measures unless more money is set aside for the budget. Three separate forces are working in the State's favour, meaning key fiscal targets may be met even as additional money is spent. The 2016 budget assumed €500 million would be available next year, a figure deployed in most election manifestoes. According to an informed source, another €200 million is now in prospect. This flows from increased economic growth, tax returns and favourable rulings on EU fiscal guidelines. At the same time, politicians and officials acknowledge that a decision by British voters to leave the EU in the June referendum could affect the State. Under Europe's reinforced budget surveillance, all member states are under legal obligation to send new forecasts from their finance ministries to Brussels by the end of this week. However, senior figures in the outgoing Coalition believe it has no authority to endorse any document for execution in coming months.
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IRISH SMALL FIRMS TOO GLOOMY TO SEEK LOANS - Businesses here are the most likely in Europe to avoid applying for loans because they believe their application will be rejected.
Fear of rejection" is a factor in discouraging borrowing by small and medium enterprises (SMEs) across the European Union, according to a study of 6,287 businesses. Non-application for fear of rejection was: Ireland 44%; Germany 24%; Greece 19%; Belgium 18%; Austria 17% and Spain 17%, the study found says the Irish Independent. It is not a surprise that borrowers here may be debt adverse following the credit bubble and subsequent crash here, according to Brian Lucey, of Trinity College Dublin, one of the authors of the report. However, if businesses are not taking on debt out of a fear of rejection - including thinking it is a waste of time applying for loans that won't be forthcoming - that is negative for the wider economy. Younger and smaller firms are more likely to feel discouraged from seeking loans, the research shows. The paper was produced by Brian Lucey, Ciarán Mac an Bhaird of Dublin City University and Javier Sánchez Vidal of the Technical University of Cartagena in Spain. Other factors turning business off bank debt include the relatively high cost of finance in some EU member states, including Ireland, Brian Lucey said. Avoiding expensive debt makes sense, if it makes the economics of a project unviable, he added.
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IRELAND AND APPLE PROBE MAY RUN TO THE END OF THE YEAR - The European Commission's probe into Ireland and the soft deal tax the country allegedly struck with Apple - which is about to enter its 23rd month - could take as long to complete as the end of this year, a leading economist has said.
The focus falls back on the Irish tax deal and the mobile phone giant as Apple prepares later today to release its key quarterly earnings that are likely to show the extent of the slowdown in sales of its key iPhone product. There were no signs yesterday from EU competition commissioner Margrethe Vestager that the probe was winding up anytime soon. Seamus Coffey an economist at UCC, who has followed the case closely, said that the case could now take to the end of a year to complete. More information has been sent to Brussels by Irish officials. Commission sources yesterday also played down the delay among political parties here to strike an agreement over a new government as the reason for the long delay in the ruling. Ms Vestager’s competition directorate formally opened the investigation in June 2014 into whether the Irish authorities effectively struck a sweetheart tax deal involving so-called transfer pricing arrangements with Apple, involving two Apple companies incorporated in Ireland.
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SAUDI ARABIA PLEDGES ECONOMIC OVERHAUL TO END 'ADDICTION TO OIL' - Saudi Arabia has unveiled a long-awaited plan for a radical transformation of its economy, pledging to end its "addiction to oil" and bolster its private sector in a shift that will see the planned $2 trillion listing of the state-owned Saudi Aramco.
Spurred by the collapse in oil prices, the kingdom has set out ambitious targets for economic and social reform under a "Vision 2030" plan that is the brainchild of Mohammed bin Salman, the 30-year-old deputy crown prince and the favoured son of King Salman bin Abdulaziz. The kingdom could end its reliance on oil within four years, the prince said in a television interview after the Saudi cabinet approved the plan on Monday morning. Saudi Arabia currently derives more than 90% of its budget revenues from hydrocarbons, writes the Financial Times. "We have an addiction to oil … this is dangerous," Prince Mohammed said in the interview on the state-owned al-Arabiya channel. "It has delayed development of other sectors." The planned flotation of a 5% stake in Aramco would value the oil giant at more than $2 trillion and mark a historic transformation of the kingdom’s primary economic engine, boosting transparency around the state-owned company’s finances, as well as granting Saudi Aramco more independence from government oil policy.
