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Business week in 60 seconds: Economy goes gangbusters


TAX CUT: Taoiseach Enda Kenny spoke of the damaging effect of high tax rates. Photo: Tony Gavin

TAX CUT: Taoiseach Enda Kenny spoke of the damaging effect of high tax rates. Photo: Tony Gavin

TAX CUT: Taoiseach Enda Kenny spoke of the damaging effect of high tax rates. Photo: Tony Gavin

The story of the week from both an economic and business point of view was the impressive GDP numbers which showed the economy surged 7.7pc between the second quarter of this year and the same period last year.

The growth was broad based and led Finance Minister Michael Noonan to increase the expected growth rate for this year for the second time in a week. He now expects GDP to rise by 4.5pc this year, up from the 3pc predicted last week and more than double the 2.1pc forecast back in April.

The Government moved quickly to manage expectations of a generous Budget next month.

But Taoiseach Enda Kenny, speaking at IBEC's President's Dinner, gave his clearest signal yet of a cut in actual income tax rates in the Budget.

He spoke of the "damaging" effect of the high tax rate for business, workers, families and Ireland's attractiveness for foreign investment.


Eircom pulls its €3bn float

Private equity giant Blackstone blinked! Late last week, Eircom announced that it wasn't going to float after all. It is going to focus on rolling out its "quadplay" offering of broadband, telly, mobile and fixed line services instead. This, says, Eircom, has a really huge potential and they'd be mad to sell the company on the cheap.

Other observers in the market suggested that the investment rationale behind the debt-laden Eircom was rather weak and that stockmarkets had been a little wobbly. Whether Eircom tries to kickstart its IPO plans next year is something that its backers will have to kick about. Eircom, as we know, has already been floated off twice with varying degrees of success for its backers. It doesn't look like a case of third time lucky?


OECD unveils tax proposals

Earlier in the week the Paris-based OECD unveiled its proposals to deal with aggressive corporate tax avoidance by big multi-nationals that have allowed them to shave billions of dollars off their bills.

The Organisation for Economic Cooperation and Development (OECD) announced a series of measures that, if implemented by members, could stop companies from employing many commonly-used practices to shift profits into tax havens.

Corporate tax avoidance has become a hot political topic following media coverage and parliamentary investigations into the arrangements many big companies use to cut tax bills.

The measures could ultimately mean that the notorious Double Irish tax avoidance scheme could come to an end.


Banks' positions improved

Ratings agency Standard & Poor has said AIB and Bank of Ireland have improved their ability to meet the cost of any new emergency.

The ratings agency revised upwards its assessment of the liquidity positions of both banks.

AIB, led by David Duffy and Ritchie Boucher's Bank of Ireland are regarded as having adequate liquidity and average ability to finance themselves on the markets, S&P said.

Banks improving funding position is mainly down to the reduction in lending to customers since the height of the credit bubble and the ditching of illiquid investments, the ratings giant said.

Sunday Indo Business