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Irish report Irish report
by Euro Reporter
2012-08-20 10:08:53
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Kenny addresses commemoration

The economic challenges facing Ireland are as great today as they were in the time of Michael Collins, Taoiseach Enda Kenny has told the annual Béal na mBláth commemoration. Speaking in West Cork this afternoon, Mr Kenny said he refused to allow “what is in reality a temporary hand-me-down financial strait-jacket” to damage Ireland’s future. He said the Government had a “moral duty” to reform the political system and would be “resolute” in the pursuit of its reform agenda.

Mr Kenny said the State’s economic difficulties should not be used as a “political excuse” not to change and restructure Ireland’s public and institutional life. “I give you my word that I will not rest and the Government will not rest until Ireland has reclaimed and restored its economic sovereignty,” he said. Mr Kenny was speaking for the first time since 2006 at the event to mark the 90th anniversary of the death of Michael Collins, and he was the first serving Taoiseach to have delivered the annual oration. He said he believed Michael Collins would have been pro-Europe.

Mr Kenny also reflected on the new “positive, mature and respectful” relationship that he said had developed between the peoples of Britain and Ireland. “Michael Collins would have been proud,” he added. The Taoiseach said the next 12 to 18 months would be a critical time for Ireland economically but he urged people to be confidence that Government was working hard on their behalf. He said he wanted to message to go out to international business leaders that Ireland was open for investment. “Let Government and people work harder than ever…to make these aspirations a reality. We have no time to waste.”

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Middle Ireland can’t take more pain, says Joan Burton

'Middle Ireland' cannot take any more financial pain, Social Protection Minister Joan Burton has admitted. Ms Burton conceded there is real concern at cabinet level that further tax increases, pay cuts or household charges would seriously damage the economy. "At home the major Irish problem is low domestic demand, particularly in the retail sector -- that needs to have its confidence boosted," she said.  She told the Sunday Independent this can only be done by the Government creating a cycle of "virtuous spending".  "The Government must recognise the importance of the retail sector -- it is the female equivalent of the construction economy in terms of creating employment," she said. It is believed that Ms Burton is anxious to avoid the high-profile clashes between ministers that occurred before the last Budget.

In an indication of the delicate balancing act the Government will have to engage in, she noted that the budgetary framework must step carefully to protect the 'high street' and rural Ireland whilst meeting the requirements of the "gentlemen of the troika''.  Ms Burton noted advocates of "simply cutting everything has certain elegance, a nice certainty that, if you cut, order will restore itself''.  But she warned that the forthcoming Budget would also have to adopt the view of the Nobel Prize-winning economist Paul Krugman, that "your spending is my income''. This should inform economic policy.  However, she said whilst "reform is necessary if we are to get rid of the troika'' it must also be tempered to have the least possible impact on "discretionary spending".  Her remarks may be interpreted by some as representing the start of ministerial debate over government spending.  One of the key political battles in the coming months will be between the Department of Social Protection which consistently absorbs 40 per cent of all government spending and embattled minister James Reilly's health department.

Ms Burton's warning that 'middle Ireland' needs to be protected is an indication of the delicate balancing act the Government will have to engage in as it strives to draw up a Budget that will please the troika by cutting a further €3bn from public spending, without plunging the country further into recession. "Middle-income Ireland is suffering, it needs to be boosted as distinct to suffering any further cutbacks," she added. In an indication of the all- pervasive nature of the economic crisis, the Social Protection Minister also warned that whilst this is the holiday season for politicians the Government continues to keep a very wary eye on the international markets. Speaking to the Sunday Independent she warned that "there is no more wicked month than August'' and added that one of the problems governments face is that this is "the time in financial institutions where young guns are out and have the opportunity to make a name'' whilst their "senior colleagues" are on their holidays. Ms Burton's concerns about the squeeze on middle-class incomes were underlined by last week's report from Davy Stockbrokers which warned that "cuts in nominal wages and higher taxes together pushing down on disposable incomes" was pushing "some marginal borrowers into arrears". It also confirmed that Irish households were not spending because they were using their money to pay down debt at a "sharper pace" than most other countries.

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Mortgage Arrears rising says report

Stockbroker firm Davy have published a report on mortgage arrears in Ireland which sees arrears rising and owner occupier arrears could be as much as 16.5%. The report says that the rise in mortgage arrears, particularly since last year, has been driven by the ‘deterioration in the labour market since 2008′. According to Davy Stockbrokers, the number of owner occupiers in arrears of over 90 days rose to 78,000 in the first quarter of this year, over double the rate compared to the first quarter of 2010.

The report said: “Weak growth going forward will weigh on borrowers’ ability to service mortgage debt, and we see owner-occupier mortgage arrears peaking at 16.5%. “If employment growth disappoints, and long-term unemployment continues to raise, our adverse scenario forecast has arrears peaking at close to 18%.”  The report also says that the buy-to-let, BTL, mortgage book is of particular concern, with many loans originating during the peak years of the housing bubble.  These arrears rates have being said to account for almost 25% of total mortgage lending and are running at over two times the owner occupier rate. Fianna Fáil said the figures ‘paint a bleak picture’. Seanad Leader & Finance Spokesman Darragh O’Brien said:  “These figures are another stark reminder that we can’t become complacent and think that the mortgage crisis facing thousands of families across the country will somehow work itself out now that the Government has finally brought forward legislation on personal solvency. “As we know, despite this legislation mortgage holders continue to remain at the mercy of the banks in terms of the types of solutions offered. There is no State support structure and without the help of MABS and groups like FLAC and New Beginning distressed borrowers have nowhere to go,” the Senator said.

Legal rights group FLAC said the Davy report was a “stark indicator” of the need to ensure lenders are more realistic and reasonable in their proposals around mortgage debt for Irish consumers. Senator O’Brien responded to FLAC’s assessment of the situation: “As FLAC rightly pointed out today, the banks need to put forward reasonable and practical solutions where people find that they have no hope of ever paying back their loan, particularly in situations where people may have a number of loans from different banks or have a mix of mortgage and personal debt to deal with.  “However, it is important that the Government heed this warning from Davy. If the banks are not prepared to bring forward measures to deal with the crisis on their own then the Government will have to act and compel the banks to deal with the crisis”.  Figures released today in an analysis of the mortgage arrears situation from stockbrokers Davy “paint a bleak picture,” according to Fianna Fáil Seanad Leader & Finance Spokesman Darragh O’Brien.  According to Davy Stockbrokers, the number of owner occupiers in arrears of over 90 days rose to 78,000 in the first quarter of this year, over double the rate compared to the first quarter of 2010. However, arrears rates for buy to let mortgages – which account for almost 25% of total mortgage lending – are running at over two times the owner occupier rate.

Senator O’Brien said: “These figures are another stark reminder that we can’t become complacent and think that the mortgage crisis facing thousands of families across the country will somehow work itself out now that the Government has finally brought forward legislation on personal solvency. As we know, despite this legislation mortgage holders continue to remain at the mercy of the banks in terms of the types of solutions offered. There is no State support structure and without the help of MABS and groups like FLAC and New Beginning distressed borrowers have nowhere to go.  “Fianna Fáil has proposed an independent office to deal with personal and mortgage debt. This would take account of the all of the financial pressures people are under and work with borrowers. We do not see any point in continuing to allow banks wield consider power in negotiations with borrowers.  “As FLAC rightly pointed out today, the banks need to put forward reasonable and practical solutions where people find that they have no hope of ever paying back their loan, particularly in situations where people may have a number of loans from different banks or have a mix of mortgage and personal debt to deal with.  “However it is important that the Government heed this warning from Davy. If the banks are not prepared to bring forward measures to deal with the crisis on their own then the Government will have to act and compel the banks to deal with the crisis.



        
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