TH€ PUNT: Can't spend, won't spend
Published 27/11/2012 | 05:00
FINANCE Minister Michael Noonan was given much to ponder yesterday with the release of new figures showing house prices falling again and data indicating consumer spending continuing to fall.
Both property values and consumer spending are extremely fragile – with the onset of a sixth savage Budget likely to be playing a bit part here in decisions not to spend.
Whether it is a big-ticket item like a house, or that new wardrobe, people are deciding to hold off.
The UCD Smurfit Business School said consumer spending was down in the third quarter of this year, marking the fourth year in a row of lower buying by households. But the rate of decline has eased. And the consumer market is more important than it is often given credit for, with 63pc of gross national product accounted for by the spending of ordinary people.
With some accountants estimating that families on €40,000 a year will be hit for an additional €3,250 in taxes and levies in the Budget, it is little wonder that purses and wallets are staying firmly shut.
Mr Noonan would do well to remember that being good boys and girls and meeting the troika targets also means that there will be little or no growth in the economy next year if people decide not to spend.
The Dame Street dynamo
The number two man at the Irish Central Bank, Matthew Elderfield, was back on home ground yesterday.
The British-born, Cambridge-educated, dynamo of Dame Street was in London to deliver a tough-talking speech on bank supervision at Bloomberg's European headquarters in the City.
He used the opportunity to give the increasingly powerful clique at European Central Bank (ECB) HQ a bit of a telling off – in particular over its dealings with the UK.
Mr Elderfield's description as "unfortunate" of a recent ECB move to force some financial intermediaries to relocate inside the eurozone in order to be eligible to process euro deals might not sound like much of a row, but its as close as central bankers normally get to publicly tearing strips off each other.
Mr Elderfield also made a wider call for safeguards to protect the UK and other "euro outs" like Sweden becoming after-thoughts in a Frankfurt-run banking union.
It was a refreshing change from the usual line-toeing we tend to hear from officials inside the eurozone, and no doubt music to the ears of the local audience.
By sheer coincidence, the speech was made just around the corner from Threadneedle Street, where the Bank of England is set for the biggest shake-up in years after Canadian Mark Carney was named as incoming governor yesterday.
He's due to take over from Mervyn King next year and no doubt already has his eyes peeled for bright, dynamic officials to help shake of the cobwebs at the Grand Old Lady.
He might do worse than ring up our own Mr Elderfield. After all, he's been battling the euro crisis since 2009, so is bound to know where the talent is hidden.
Profits pay off for Origin execs
It's a rare company that can describe 11pc growth in Q1 profits as weak, but that's exactly what Origin Enterprises did yesterday.
The company has transformed itself in recent years into an almost pure agronomy business in the UK, helping farmers get more bang for their buck when it comes to crops. And it has paid off handsomely so far.
The decision to spin off its consumer goods division into the Valeo joint venture has also proved to be a good one, coming as it did during what has now become a structural decline in consumer spending here.
Company chief executive Tom O'Mahony and his fellow executives have been well paid for their efforts, sharing a €21m bonus pool.
Seeing as the business is majority-owned by Aryzta, whose chief executive Owen Killian is one of the best-paid in the country, that's not surprising.
Based on his performance, however, there is little doubt Mr O'Mahony has earned his money.