Sunday 24 September 2017

Europe's deal: the verdict

Corporate giants give their opinion on what the latest EU moves really mean for us

Nick Webb, Roisin Burke, John Reynolds and Harry Leech

Markets leapt on news of Europe's bailout for Greece, but is the euphoria all it's cracked up to be? We asked some of Ireland's corporate big beasts whether they thought that the deal was enough to pull Ireland out of the do do and whether Europe had finally got a handle on the debt crisis.

Pat Gunne

CEO Green Property

"This is clearly a major step forward in the context of euro stability, but I suspect it is the first of many steps over a protracted time period, as opposed to an immediate and definitive solution.

"Step one was to put a stop to contagion, but until there is closer fiscal unity the euro project will be at risk. The financial reality of deficits in the 'peripherals' and the ever-increasing debt-to-GDP levels hasn't been dealt with. Political constraints have left the troika a step behind the markets, time will tell if this is enough to get ahead."

Pat McDonagh

Owner of Supermac's

"As things stood, anyone was able to borrow money more cheaply than we were, so this is good news. But the Government still needs to keep working on it, because it's not just the lowering of the interest rates and the extension of the loan time that matter.

"We still can't continue to afford to borrow €500m per week or €26bn per year to keep the country going, so we have to get our own house in order. And things like the universal social charge and the proposed water rates take a chunk out of disposable income that hurt business."

Hugo MacNeill

Managing Director Ireland Goldman Sachs

"I think the announcements are positive for Europe in general, and Ireland in particular. There was a fear that political considerations within various countries were preventing decisive necessary economic action -- potentially a very dangerous dynamic.

"My economist colleagues' view, which I would agree with, is that the package for Greece is stronger than expected, measures to stem contagion are positive (eg: the ability of the EFSF to intervene in secondary bond markets) and lowering interest rate costs for Ireland and Portugal materially improve the debt sustainability of these countries.

"It was important the Government was strong on corporation tax as other countries are targeting companies here (eg: Singapore and the aircraft leasing companies)."

Patrick Coveney

CEO Greencore

"This feels like it's a strong and important start. Both the reduction in the rate and, more importantly, the increase in the time period in which the loan can be repaid, will bring some stability. And if it's true that it's with no strings attached regarding important matters like our corporate tax policies, that's very very good.

"I do, however, think though there's a longer-term question over the level of indebtedness that the Irish state is taking on and how that's dealt with over time. But that's an issue for another day -- we should be pleased this week."

Joe Carr

Managing Partner, Mazars

"All boats rise on the tide of confidence in the various economies in Europe and this certainly helps. Behind that then is the question of who picks up the tab for the party that we had! But that's secondary in importance, the most important thing is to get the economy going.

"This move is a sign that Europe is moving to be more federal, more united in its approach to solve the problem. That has consequences as well, but overall it's a good thing -- it would be very bleak if Europe couldn't get it together. We're moving towards a group solution."

Robert Finnegan

Chief Executive 3 Ireland

"The agreement reached at Thursday's summit will be a psychological shot in the arm for the economy. It's not just about interest rate reductions or extensions in repayment periods -- it's about getting confidence back into the domestic economy, and restoring international investors' confidence in Ireland.

"While it is good news, we still need to cut spending in order to repay our debts. However, this deal gives us a fighting chance -- for that alone it deserves a broad welcome."

John Mullins

CEO Bord Gais

"It's better than I expected, though a few more twists may emerge. It was a significant show of unified leadership between Germany and France.

"Our debt is now more manageable in the medium term. There's a greater likelihood of us returning to the bond markets, and that's a positive development, but our fiscal deficit must still be addressed.

"We have to look very closely at how we spend our money. There are still tough times ahead over the next two to three years, but if we take more pain now, there'll be a greater gain in the future."

Tanya Airey

Boss of Sunway Travel

"Overall, the deal looks very positive. First, the interest saving, though not available to help us avoid some unpalatable austerity measures (cuts in carers' allowances, etc), is still substantial and will assist in reducing the budget deficit sooner than otherwise. And the extension gives us more breathing space to refinance.

"It also looks as though we will have the ability to buy back our bonds at a discount with the aid of EU funding at a lower rate of interest.

"Finally, if we live up to our commitments under the bailout memo of agreement, we seem assured of further assistance in obtaining funds should we be unable to re-access the markets by 2013, without needing a further bailout, and it also appears to me that any change to our 12.5 per cent corporation tax rate is finally off the table."

Tom Noonan

CEO Maxol Group

"The reworking of the deal is going to be good for us in the long term -- we pay back less and over a longer period.

"However, Irish-owned companies like Maxol that only operate on the island of Ireland need to see some sort of stimulus as consumer confidence has never been lower than it is -- that is the reality businesses are facing.

"If consumer confidence grows because the deal is less onerous than it was, that will be good, but it's too soon to be definitive on that. We've been told a few times already that this problem has finally been solved, but with this deal at least they're moving in the right direction."

David McRedmond

Chief Executive TV3

"I read in the Telegraph last week that the sluggish recovery is proving tougher than the recession for many people. There is a desperate need for some good news and a reduction in Ireland's interest bill is good news.

"I hope the Government doesn't now take too long a summer break. It needs to build on this confidence measure to encourage those consumers who have money to save a little less and spend a little more this autumn. It may not take a huge stimulus to get the domestic economy moving again."

Sunday Indo Business

Also in Business