Anglo: Irish business gives its verdict
Is last week's agreement a game-changer? The big beasts of Irish business tell Louise McBride what it means
Europe's jackboot has been taken off the neck of the Irish economy, following last week's dramatic deal on the hated promissory note.
The agreement, which spreads the cost of the Anglo bailout over 40 years instead of 10, will potentially save the country up to €1bn a year. So is it a game changer for our bedraggled economy? And what does it mean for Irish firms? We asked some of the big beasts of Irish business for their read on the deal.
Entrepreneur and Glen Dimplex founder Martin Naug- hton described the package as "very positive news".
"Following this deal, we think that Ireland has turned a corner," Naughton said. "It is very good for our international image."
The chairman of Connemara Mining and Petrel Resources, John Teeling, said the Government had "effectively written off" the cost of the Anglo bailout with the new deal.
"Within 30 to 50 years, the cost of that debt will be effectively wiped out by inflation," Teeling said. "This deal will save us between half a billion to a billion euro a year – and every billion counts."
Teeling also said the deal would help reduce Ireland's borrowing costs. "From an international viewpoint, the deal makes us look better. Ireland still has vast quantities of debt but, with a better international image, the interest rate we pay on loans will come down."
Teeling did not go as far as describing the deal as a game changer. "It's one of a number of essential things that had to be done," he said.
"The deal will have a positive impact on confidence and the perception that others have of us.
"The international economy will decide Ireland's fate but you can't build a house until you get your foundations in place – and this deal is important for that."
Greencore boss Patrick Coveney said the deal would "undoubtedly" help our economy recover.
"It represents another step on the road to recovery and self-sufficiency," Coveney said. "I don't think I would quite call it a game changer.
"However, it will improve the State's cash flow for the next decade, which is hugely important. Under the deal, the State has to pay out less money, and our deficit will be reduced, which is good," he added.
Coveney also expects the agreement to improve Ireland's international reputation.
"It further builds up international confidence in the State – and the credibility of the Government and Irish institutions to get things done," he said. Coveney expects businesses to benefit from the deal – if it leads to a pick-up in economic confidence.
"It also reduces our overall debt, which should reduce the cost of borrowing for everyone," he said. "It is important, however, that the Government gets the combination and confidence and growth into the domestic economy. Internationally traded sectors of the economy are doing well – but we still have a very depressed local economy."
CEO of the Maxol Group Tom Noonan said the package should help to stimulate Ireland's local economy.
"The area we need most help in at the moment is the local economy," Noonan said. "If this deal puts more money into people's pockets, that's a good thing."
Noonan said that oil consumption is back to 2001 levels thanks to the recession – and the past few austerity Budgets. However, he feels the latest deal should improve consumer confidence, which should make life a bit easier for retailers.
"With our business, we need people to have money in their pockets to buy fuel," Noonan said. "Sentiment pays a huge part in retail. If consumers are worried about the future, they'll keep their hands in their pockets."
'Within 30 to 50 years, the cost of that debt will be effectively wiped out by inflation'
Noonan doesn't expect the Irish economy to see the benefits of the deal until next year. However, he feels the deal may also help to sort out the problems of the Irish banks, which will be good for businesses.
"If the deal accelerates a rationalisation of the banks and gets the banks back to normal business, we should see proper lending to small businesses, which would help the economy," he said.
KBC Bank Ireland boss John Reynolds said the deal "is as good as – or possibly slightly better – than might have been reasonably expected".
"The deal has already had a clear benefit when you look at financial market sentiment and that, in time, should translate into an improvement in Ireland's credit condition," Reynolds said.
"The easing in the near-term debt burden will also have a positive – if modest – impact on the Budget arithmetic in the next couple of years. This, in turn, will provide a modest, but very welcome, boost to Irish economic growth prospects. Ireland still faces many challenges and there are no magic solutions but this deal should help a gradual recovery take hold."
"Any deal that allows for repayment of debt over a significantly longer period at lower interest rates is good news," said Robert Finnegan, chief executive of 3 Ireland.
"In addition, we have restructured the debt in a way that avoids a default, which is a very important message for foreign investors. However, we still need to get our day-to -day spending in line with income. This deal will help our public finances but, unfortunately, doesn't sort out the continuing imbalance between what the State earns and what it spends."
Finnegan believes the deal will start to restore consumer confidence, "which should result in people spending a little more".
"It will also have a positive impact on foreign investors considering investing in Ireland," he said.
Businessman Declan Ganley said the deal puts Ireland "in a better position than it was, though it's still very far from where we need to be".
Although Ganley said the deal should help our economy improve, he said: "We still have a ball and chain around our necks – but it's lighter."
"The Government needs to do other sweeping things, such as establishing a flat tax rate so that people have more money in their pockets."
Ganley said the Irish people still need to know the full details on how the bank bailouts and guarantee came to be, including the beneficiaries of the bailouts.
"Without this, watching people doing a lap of honour over the fact that they have managed to remove a few rocks out of the sack that's been put on the backs of the Irish people is a victory of low expectations," he said.
Mark Bourke, chief of IFG Group, said the deal was a "good result".
"An interest rate change and a massive extension to the loan is equivalent to a level of debt forgiveness," he said.
"Saving €1bn a year is a substantial amount of money, so the deal is bound to help our economy get back on its feet.
"It's all everyone could have hoped for and it comes not a moment too soon. Up until now, it looked like Ireland was getting nowhere [dealing with its debt problem]."
"In my view this is a big and very positive step in the right direction," said Myra Garrett, managing partner of one of Ireland's biggest law firms, William Fry.