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by Euro Reporter
2013-11-04 11:10:37
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Ireland to be hit by an increase in taxes

Supermarket trips have left shoppers horrified by a double whammy of depressed wages and food prices which have rocketed by 35.6 per cent over the past six years. In Ireland, food bills are up just one per cent over the same period and while Irish energy bills have increased by 28 per cent, Britain’s have risen 61 per cent. At first glance, Britain does not compare too well with many other countries in the eurozone and further afield. The consumer price index is up just 9.8 per cent in France, 10 per cent in Canada, 10.2 per cent in Germany and 12.4 per cent in the United States during the same period. According to economists, the UK is in fact far better off than its European neighbours who are having to cope with record unemployment with no prospect of improvement. Philip O’Sullivan, Investec Ireland’s chief economist, said that for the past two years the republic’s economic backdrop has been very tough and that the price drops for everyday goods are indicative of a bleak. He said: “Huge unemployment has weighed heavily on consumer prices which have been static to falling because of a catastrophic drop in demand. Food and clothing are way down on what they were and services like hotels and restaurants are cutting their prices in order to survive.

“The cost of living would be higher in the UK where the weak Sterling is importing additional inflation into the UK.” The crash of Lehman Brothers in 2008 and the subsequent banking collapse led to a sudden and dramatic depreciation in Sterling which overnight saw Britain a fifth worse off compared with the rest of the world. This, combined with a sudden rise in demand from emerging markets, led to a spike in commodity prices, including oil. These two phenomena meant that UK households suddenly had to cope with having to pay far more for foreign goods and services just before wages began to fall substantially in real terms. Taxes also went up, with VAT rising from 17.5 to 20 per cent at the same time as the deficit-reducing programme hit, with reduced subsidies to services like railways, leading to price rises which were immediately passed on to the consumer. Quantitative easing raised inflation just as wages became depressed, with many workers suffering from pay freezes in the private sector, especially while prices continued to rise. However bad the longevity of the squeeze might feel to the average British household trying to feed their children and keep their homes warm this winter, the stark reality is that while the fall in living standards is unpleasant, it is on balance preferable to the chaos suffered by other deficit countries in the beleaguered eurozone.

Alongside its lower food prices, however, Ireland is being hit by taxes and other costs. Healthcare costs are getting higher as are university fees, prescription charges and also a charge for GP visits or being treated in hospital. Anyone walking into a hospital now has to pay when they are treated, in a move designed by government ministers to temper demand for these services. Mr O’Sullivan said: “Household furnishings and telephone charges are way down but anyone on an average wage of £27,200 (€32,000) – higher than a comparable British job – is now paying 41 per cent tax but added stealth taxes take that up to more than 50 per cent. The lower rate sits at 20 per cent but they too end up paying more because of added social insurance taxes which have been recently introduced by ministers. “There is also a new local property tax and we will start to pay for water for the first time in January. There is a different dynamic here to the UK where we are paying a high tax straight to central government and also 23 per cent VAT. “For the first half of the past decade, we were known as the Celtic Tiger for our growth but we are now more like the Celtic Garfield.” Economists insist that while families are struggling to pay bills we have every reason to be positive about the future in Britain because our unemployment is at a record low. Dr Howard Archer, chief European and UK economist of IHS Global Insight’s Country Analysis and Forecasting, said: “The labour market has held up which is helping.

“In September, the unemployment rates across the 17 European countries using the euro was at a record high of 12.2 per cent, while a quarter of Spain’s population is now out of work. “In the UK, the labour market has been reasonably resilient and has been improving quite a lot, with employment at record highs at present and unemployment sitting at 7.7 per cent. A lot of people have had to take wage freezes and others have been forced into working shorter hours but the UK is still stronger than most EU countries and this is giving support to the consumer. “An increase in house prices, although a concern further out, tends to make consumers feel better off and consumer confidence in September rose to a six-year high. “We may be facing a very tight fiscal policy but nothing new has happened there; there have been no nasty shocks and it is no tougher than we knew it was going to be. “Interest rates, too, are very low with mortgages at their lowest levels on record but, in the eurozone, the worst affected areas of Greece and Ireland have seen a lot of pay cuts and despite that unemployment has been rising.” By the year end, the total number of people without work in the eurozone is expected to hit 20 million. The cost of living debate will be the dominant issue of the 2015 General Election and Labour leader Ed Miliband will turn up the heat on the coalition policies with a keynote speech on Britain’s low wages on Tuesday.

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First pregnancy in Ireland using new screening technique

The first confirmed pregnancy in the State using a technique to screen embryos for genetic conditions such as cystic fibrosis prior to implantation has been announced by a fertility clinic in Cork. The Cork Fertility Centre is one of just two clinics in the Republic licensed by the Irish Medicines Bord to offer pre-implantation genetic diagnosis (PGD) which involves embryo biopsy and screening in collaboration with a specialist genetics laboratory in the UK. Laboratory Manager at Cork Fertility Clinic, Dr Tim Dineen said the woman in this case, who is in the early stages of pregnancy, is a carrier of the CF gene while her partner is also affected by the CF gene and the risk of them having a child with CF was one in two without PGD. The PDG process, which costs €9,800 at the Cork centre, involves generating a number of embryos via IVF treatment with the embryos then biopsied through the removal of one cell from each embryo. These are then sent to the Genetic Centre in the UK for analysis.

Dr Zhang explained that, after the biopsy procedure for this couple, the embryos were frozen by means of ‘Vitrification’ with the female partner returning later to have one embryo, which was diagnosed as being unaffected by the condition, being transferred into the uterus. “Only embryos diagnosed as being unaffected by the condition are selected for transfer into the womb of the female partner,” said Dr Zhang, adding that the remaining embryos are currently cryo-preserved pending the outcome of the treatment and the decision of the parents. Head of Research and Development at Cork Fertility Centre, Dr Xiao Zhang said the centre were delighted for the couple involved and hailed the result as “an important landmark” for fertility treatment in Ireland.

“Pre-implantation genetic diagnosis and pre-implantation genetic screening (PGS) is a breakthrough for Irish couples as it now enables them to avail of these very specialised treatments at home and avoid the travel costs and stress associated with going abroad,” he said. Dr Zhang explained that Cystic Fibrosis in the most commonly inherited genetic disease in Ireland with one in 19 Irish adults carrying the altered gene that causes the condition and if both partners carry the gene, there is a one in four chance their baby will have Cystic Fibrosis. Meanwhile Dr Dineen said the PGD technique allows people with a specific inherited conditions such as Fragile X syndrome, Duchenne Muscular Dystrophy, Myotonic Dystrophy, Tay-Sach’s disease and Haemophilia A the option of trying to avoid passing it on to their children.

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Lenders should set aside post-bailout funds for Ireland

Ireland's lenders should set some money aside for when the country exits its bailout, which it should do step by step, a senior International Monetary Fund official said today. Ireland is scheduled to quit its €85bn rescue programme next month, becoming the first euro zone country to do so. "Ireland has done everything it can to stabilise its economy again but the economy remains weak," David Lipton, first deputy managing director of the IMF, said in an interview with Germany's Die Welt newspaper.

Given this, the 'Troika' of lenders from the IMF, European Commission and European Central Bank should support Ireland with "precautionary measures" to cement its transition back to financial independence. "We want a package which makes money available in case of emergency - even if we do not expect there to be an emergency," Lipton was quoted as saying. Irish Finance Minister Michael Noonan said in October the country may dispense with the insurance policy of a precautionary credit line when its aid programme ends on December 15, but that no final decision had been made.

Ireland sought outside financial help in late 2010 as the consequences of a rescue of its banks hurt in the financial crisis drove it close to bankruptcy. Following years of fiscal austerity to meet the conditions of the bailout, the economy is expected to grow slightly this year and expand at a faster clip in 2014. But yet more spending cuts are on the agenda for next year and unemployment remains high. Lipton also said it was up to the Irish government to decide if it needed a second aid programme.


         
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