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Irish report Irish report
by Euro Reporter
2012-03-23 07:36:26
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Ireland back in recession as economy shrinks in Q4

Ireland dropped back into recession at the end of 2011, government statisticians reported Thursday in a worrying sign for the country's efforts to emerge from an international bailout. The Central Statistics Agency said gross domestic product fell 0.2 percent in the October-December quarter. That came on top of a 1.1 percent decline in the previous quarter, putting Ireland in a new recession, technically defined as two consecutive quarters of contraction. Gross national product — a measure many economists prefer to use for Ireland because it excludes the exported profits of multinational companies — fell by a much sharper 2.2 percent. That followed a GNP fall of 1.9 percent in the third quarter, suggesting a much harsher recession for Irish households and businesses. For 2011 as a whole, Irish GDP grew 0.7 percent but underlying GNP fell 2.5 percent. Irish GDP had fallen for three straight years: 3 percent in 2008, 7 percent in 2009 and 0.4 percent in 2010.

Ireland needs to revive economic activity to boost employment and tax collections, and thereby reduce its yawning budget deficits. Despite imposing four straight years of tax hikes and spending cuts, Ireland still is expected this year to collect just €38 billion ($50 billion) in taxes while spending €56 billion. Finance Minister Michael Noonan said Ireland was negotiating with the European Central Bank to reduce Ireland's spending by €3.1 billion this year by deferring, until 2025, a repayment of a bank-bailout IOU due March 31. "The details of the arrangement ... are being worked out," Noonan told lawmakers. But talks Thursday between Irish and ECB officials in Frankfurt produced no agreement, only a promise of further talks.

Ireland is seeking to renegotiate a 2010 agreement that requires Ireland to pay out more than €47 billion to creditors of two failed nationalized banks, Anglo Irish Bank and Irish Nationwide, in annual instalments concluding in 2031. Noonan says Ireland wants the ECB to let Ireland avoid this year's payment by instead accepting an Irish government bond as collateral. The Irish want the ECB to accept the bond and provide the €3.1 billion itself. Since early 2011, the Irish government has paid its bills thanks only to a €67.5 billion ($90 billion) credit line supplied by the European Union, ECB and International Monetary Fund. Ireland hopes to restore its credit rating and resume normal borrowing from bond markets before its bailout funds run dry in late 2013. As part of the bailout deal, the international lenders expect Ireland to cut its deficits to 3 percent of GDP by 2016. The deficit in 2011 was 10 percent and the government is aiming for 8.6 percent this year. But the target presumes Ireland can achieve 1.3 percent growth in 2012, a forecast that few economists think is credible. Alan McQuaid, chief economist at Bloxham Stockbrokers in Dublin, said he expects GDP to grow just 0.5 percent in 2012 and GNP to fall further as consumer spending declines for a fifth straight year. Consumer spending fell 2.7 percent in 2011. He cautioned that predicting Ireland's growth is difficult because the country is exceptionally exposed to economic trends outside the eurozone in Britain and United States, its two major trading partners.

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Ireland's INM says supermarkets buck ad spend decline


Advertising spending by budget supermarkets is helping to limit the impact of sharp falls across the rest of the Irish advertising market, Independent News & Media said on Thursday after announcing a 9 percent fall in profit for 2011. The Irish economy remains in the doldrums and there is a little sign of a recovery in 2012, INM's Chief Executive Gavin O'Reilly told Reuters, adding that the publishing group achieved a robust performance last year given the backdrop. "The Irish consumer is hurting still. There is a lot of debt in the marketplace, people is very unsure of their future...as a result, advertisers are spending far less than they were before," O'Reilly said.

"There are one or two exceptions. The supermarket retailers are spending pretty decisively. It's Tesco, it's Aldi, it's Lidl," he added. Advertising spend in Ireland fell 11 percent last year. "We're looking at advertising probably being down mid-single digits this year," he said. "It still looks to be a challenging year. I haven't quite seen the green shoots that people are alluding to," he added. INM cut its 2011 profit forecast in November after global economic uncertainty hit advertising sales, prompting its largest shareholder to call for the chief executive's resignation.

Irish billionaire Denis O'Brien, who owns nearly 22 percent of the group and has fought with management for years, said that the second profit warning in three months risked Independent News encountering difficulties with its bankers. The Financial Times reported on Thursday that fellow Irish billionaire Dermot Desmond, who recently raised his stake to 5.75 percent from nearly 4 percent at the start of the year, is supportive of the move, with both shareholders seeking to oust O'Reilly at the media group's annual meeting in June. The Dublin-based group has radically restructured over the past two years, selling its flagship UK title the Independent, as well as interests in India, shutting loss-making newspapers in Ireland and swapping debt for equity to secure its future.

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Irish plan to trial GM potatoes


Teagasc, the Irish State Agriculture and Food Development Agency, has asked the Irish Environmental Protection Agency for permission to start outdoor trials of genetically modified (GM) potatoes. The plants have been made blight resistant. The request to move a GM experiment out-of-doors to test its fungal resistance could also move agriculture, north and south of the border, in a new direction. And it is not a direction every farmer, consumer or environmentalist would welcome. A previous attempt to grow GM sugar beet in the open ended with the plants being destroyed by protesters in County Wexford.

It is not absolutely clear just how GM-free the whole island of Ireland has been. There were claims of a GM experiment with potatoes in Northern Ireland, albeit behind very firmly closed doors before the UK signed up for the EU directive on the subject. And in a recent consultation document on the subject the preamble stated that there had been little GM activity in Northern Ireland. Noticeably it didn't claim that there had been none. But destroyed sugar beet apart, it seems that no GM crops have ever been grown in the open in Ireland. Depending on who you listen to, the potential problems that could be caused by GM crops are various.

The biggest fear is that of cross-contamination caused by cross-pollination between "normal" crops and GM crops.  EU directives set out the need for minimum distances between GM crops and other plants. But the sceptics argue that a bee can fly for miles so distance is no protection. Once a GM crop becomes cross-fertilised with a native species the genie is out of the bottle for ever say the critics. Teagasc say that the GM potatoes would not be grown near any other crop and that the potatoes wouldn't enter any food chains. GM crop experimentation can have unseen consequences. In the USA plans to make weed spraying easier by breeding GM crops that were resistant to weed killer went wrong.



        
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