Saturday 20 January 2018

Richard Curran: Brexiteers are leading the UK towards not-so-splendid isolation

British Prime Minister Theresa May signs the official letter to European Council President Donald Tusk invoking Article 50 last week. Photo: Getty
British Prime Minister Theresa May signs the official letter to European Council President Donald Tusk invoking Article 50 last week. Photo: Getty
Richard Curran

Richard Curran

The Brexit political experiment is under way. Brexit has always been about politics and not economics. That is why the Leave campaign won despite the plethora of business people, economists and other analysts saying it would be financial madness.

Irish business figures have been echoing those sentiments not only in relation to the implications for Ireland but for the UK itself. Big hitters like Ryanair's Michael O'Leary has been joined this week by Greencore chief executive Patrick Coveney who warned about the massive economic mistake the British were about to make.

Having delivered her Article 50 letter, the omens for British Prime Minister Theresa May are not good. The first thing that should have been on the discussion list was the status of several million EU citizens who live in the UK and several million more British citizens who live in the EU.

Mutual re-assurances about their status from both sides would have been appropriate and set a better tone.

Instead, the first thing the talks will deal with is money. How much will the divorce cost? May has admitted that the full freedom of movement of people to the UK will probably continue until at least March 2019. Yet, long before that date a deal will have to be hammered out on how big a cheque the UK will have to write to the EU to cover its outstanding financial obligations.

This means May will have to explain to British Brexit voters why she is writing a cheque to Brussels for tens of billions of euro, while nothing will change for nearly three years about their desire to have fewer EU workers coming to Britain.

It is a recipe for a toughening of the British stance. May will have to secure some early wins at the talks to quell the inevitable cry of "sell-out".

Meanwhile, little old Ireland is caught in the crossfire. The Article 50 letter mentioned Ireland, the Border and the Good Friday Agreement but it is little comfort. On Thursday May wrote about Ireland that she understands the "special significance of this relationship and I am personally committed to strengthening it, not weakening it, as the UK leaves the EU".

Cold comfort indeed. By adopting a tough Brexit line she has put that relationship in the greatest jeopardy in decades. What on earth does strengthening it mean in the context of Brexit? And of course, her "personal" commitment is helpful, as long as she remains Prime Minister. She may not be in the job that long.

Back home, Irish businesses are being told to prepare for the worst. You only have to look at the impact that Brexit has had on the Irish economy and the talks haven't even started yet. British tourist numbers to Ireland are down over 6pc. Advertising agencies controlled from London have pulled millions of euro worth of advertising from the Irish market because of Brexit cautiousness, despite the fact our economy has been growing by 3pc per year.

Ryanair has pulled back from further expansion on UK/Ireland routes and that is not good for our economy. Mushroom producers and processors have been severely affected. Irish exporters have seen sales challenged by a weaker sterling. The list goes on.

It is going to be a long tedious road and unfortunately, domestic British political concerns will set the tone. Some of the jingoism and archaic rhetoric in the British media has been vomit-inducing, as some commentators delighted in the fact that May would invoke Henry VIII clauses to convert EU law post-Brexit.

The Prime Minister has asserted that a bad deal for Britain is far worse than no deal. She is wrong about that. No deal with the EU will lead to Britain's isolation and it won't be a splendid one.

Don't fret about losing Lloyd's to Michelin-star Brussels

Dublin is not exactly off to a flying start when it comes to luring financial services jobs away from London.

Firstly, AIG chose Luxembourg and then last week insurer Lloyd's of London opted for Brussels. The finger is being pointed at the Central Bank for being too tough on regulation. That seems a little unfair, given the clamour we all had for the highest regulatory standards just a few years ago.

Reasons given for Lloyd's decision to opt for Brussels included a regulatory understanding of the insurance industry. This rings a little hollow given that Brussels doesn't have a substantial insurance industry. Is it code speak for a regulatory understanding of how to make it more attractive for an insurer to come to Brussels around issues like regulatory capital, etc.

Another reason given is the proximity of a Brussels base to EU politicians. This seems a little daft given that Dublin is less than an hour-and-a-half away by plane.

There was some speculation that Brussels swung it because of lifestyle factors such as having more fine restaurants. I'll bet it does. EU civil servants don't do snack boxes or value chicken bucket meals. Brussels has the third-highest number of Michelin star restaurants in Europe, after Paris and London.

But we shouldn't beat ourselves up about Lloyd's or the restaurants. After all, the new Lloyd's EU base in Brussels is expected to hire just 100 staff.

Meanwhile, JP Morgan Chase, which already has a sizeable operation here, is reported to be looking for a big new office that could take up to 1,000 staff as part of a post-Brexit shift of some employees. And Royal London is turning its Irish unit into a regulated Irish subsidiary.

That is the thing about the IFSC. Companies which already have operations in Dublin know it and like it. Those who aren't that familiar with it need more convincing. We might appear to be off to a shaky start on post-Brexit financial services, but we were never going to do all that well anyway.

Twitter share price needs more than delayed action to curb trolls

Twitter chief executive Jack Dorsey was in Dublin last week, describing how the company is tackling Twitter trolls and online verbal abuse. He said all the right things about protecting people online, listening to them and making the right changes.

The problem is Twitter left it far too late and it looks like the firm has been forced into taking elementary initiatives to stem the torrent of trolling. You know things have got really bad when comedians start making jokes about your company.

One British comedian I heard recently said he prefers Facebook to Twitter because he would rather get a nice birthday greeting from someone who doesn't mean it, than a death threat from someone who does.

Dorsey made no mention of the unsuccessful sale talks that took place less than a year ago, when it looked like the company was on the block but none of the big guns wanted to buy it at the right price. Its two key problems are addressing trolling (and they are not alone in that one) and building a profitable business model.

Dorsey indicated that Twitter user numbers were back growing again and now he believes he has cracked the trolling problem. But what about the money, Jack?

Twitter shares are trading at $15, down 78pc on their January 2014 level of $69. Yet in the same period the Nasdaq is up 40pc and the Dow Jones is up 26pc. Dorsey may be talking about taking long-term care of Twitter users, but it won't be that long until sale talks open up again.

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