HOUSING MARKET STILL FACING PAINFUL CORRECTION - The International Monetary Fund has passed its verdict on the Irish economy and on the Government's big NAMA idea. The chief European economist at rating agency Standard & Poors, Jean-Michel Six, says that S&P's predictions are pretty much in line with the IMF report on the Irish economy. The economist says that the rating agency had been predicting a severe slump for the economy here for some time, especially in the housing market.
Yesterday S&P said that it anticipates a fall of 13% in house prices this year, with a further 10% dip next year. It adds that prices had already fallen by just over 20% from their peak by April this year. The economist said the housing data just stressed how serious the situation is for the Irish economy at the moment.
Mr Six said that all housing markets in Europe, with the exception of Germany and possibly Switzerland, are in a slump with all prices declining in the region. However, he says there are some differences in the different countries - the level of household debt and too many houses on the market for the demographic demand. He says that there is excess supply in the Irish and Spanish markets, with about 250,000 too many Irish houses up for sale.
In the medium-term, Mr Six says he sees a stabilisation in the market but adds that a very long and painful correction lies ahead.
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IMF SAYS NATIONALISATION CAN BE PART OF NAMA - Kevin McConnell, of Bloxham Stockbrokers, says the IMF's assessment that bank losses could rise to €35 billion is not a huge surprise. He says the new piece of information coming from the IMF report is their assessment of NAMA and nationalisation. He says that people will especially focus on the point that IMF says nationalisation of the banks can happen as part of the NAMA process. However, he says he does not believe that the Government will go ahead and nationalise more of the banks here.
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MORNING BRIEFS - DSG International, Europe's second-biggest electrical goods retailer which operates here as Currys and PC World, said that total sales at its Irish and UK operations were down 11% to £4.23 billion sterling. It said that underlying profits at its UK and Irish operations came to £58.7m for the 52 weeks to May 2, down from £156.7m the same time last year. DSG said that the economic environment in Ireland remains very tough.
*** There was plenty of banking activity here yesterday with Irish banks among 1,100 financial institutions borrowing €442 billion of cheap money from the European Central Bank. The ECB's move is one of three to release money from its own reserves to get money and credit flowing in the euro zone. The money is being loaned to banks for 12 months at 1%. Perhaps it will mean help at last for businesses here who are suffering because they can not get lines of credit from the banks.
*** There is something of a price war amongst the supermarkets emerging this morning. SuperValu says it is promising to cut the average cost of a weekly trolley of goods by €30 as Tesco continues its roll out putting new and cheaper cost products on its shelves.
*** Turlough O'Sullivan has long been heard on these airwaves jousting on issues like public sector pay in his role as head of the employers body, IBEC. He announced his retirement earlier this year and yesterday it was announced that IBEC head of policy Danny McCoy is taking over in July.
*** The Financial Times reports that Independent News and Media has agreed an extension of a standstill agreement with bond holders over the repayment of a €200m in debt the company was due to pay tomorrow. Bond holders earlier rejected a proposal to repay the debt using asset disposals and the proceeds of a rights issue.
*** On the currency markets, the euro is worth $1.3981 and 85.08 pence sterling.
