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Noonan survived, but I was right about further rate cuts

SMILING THROUGH THE PAIN: Brendan Howlin and Michael NoonanEvery year our financial columnist Dan White makes his business and economic predictions for the year ahead. How did he perform for the year just ending? Here are White's hits and misses for 2013.

1 A deal on the 'fiscal cliff' will set the stage for a strong US recovery.

This one went to the wire with the Republican crazies in Congress threatening to block any budget deal, even if meant the US defaulting on its debts, plunging the global economy into crisis.

Such an appalling vista prompted Senate Republicans to elbow their House "colleagues" aside and a deal was finally struck with the White House in early December. The budget deal has further stoked the burgeoning US economy with the IMF now forecasting growth of 2.6pc in 2014. Hit.

2repossessions will soar Central Bank figures show that lenders repossessed 209 family homes in the third quarter and a further 62 buy-to-let properties. While this was up slightly on the third quarter of 2012, with almost 240,000 mortgages either in arrears and/or having been restructured, it barely scratches the surface of the problem. Miss.

3 there will be a deal on bank debt No there won't, at least not yet. Despite a pledge from European leaders to retrospectively recapitalise Irish banks at their June 2012 summit, the Eurozone creditor countries, ie Angela Merkel's (inset) Germany, seem determined to welch on their promise. Miss.

4michael noonan will step down as finance minister No he didn't.

Despite hitting his 70th birthday in 2013 Michael Noonan remains in situ, at least until next autumn's cabinet reshuffle. Miss.

5more retailers will go bust Where do we start? DIY chains B&Q and Homebase both went into examinership in 2012. An examiner was also appointed to fashion retailer A-Wear, HMV's Irish operation went into receivership while Musgrave announced that it was killing off the Superquinn brand. Hit.

6the worsening eurozone crisis will force a german u-turn It should but it hasn't, at least not up until now. With France having joined Spain, Italy, Greece and Portugal in the Eurozone's intensive care unit, the economic situation facing most of the single currency area is now truly desperate – a 1930s-style depression with jobless levels to match.

Meanwhile, Germany is running a current account surplus equivalent to 7pc of its GDP, higher in proportionate terms than China's. Miss – at least for now.

7the ecb will cut interest rates Germany may be oblivious to the Eurozone's ever-worsening economic crisis but ECB boss Mario Draghi (inset) certainly isn't. With Eurozone money supply now falling – a key indicator of economic contraction in the very near future – and the Eurozone seriously under-shooting its already modest 2pc annual inflation target, Mr Draghi did the unthinkable in November when he pushed through an ECB interest rate cut in the face of fierce German opposition. Hit.

8 A strong economic recovery will kick in during the second half of the year We have been here before – with forecasts of strong economic growth not being matched by the eventual outcome. With the employers' body IBEC predicting 2.8pc economic growth for 2014, the ESRI almost as optimistic with a 2.7pc forecast and even the OECD predicting 1.9pc growth next year, why should things be any different this time around? Well for a start employment is growing strongly once again with the number of people at work jumping by almost 30,000 in the third quarter. Also in the third quarter, the CSO calculates that the Irish economy grew by a relatively strong 1.5pc in the third quarter. Hit.

9government will set the banks binding lending targets Despite, or should that be because of, costing the taxpayer €64bn and bankrupting the sovereign Irish State, the banks continue to run rings around the Government. The banks repeatedly promise to increase lending and then spend a fortune on expensive advertising campaigns designed to convince us that they are lending once again. The reality is very, very different with the latest Central Bank statistics showing that lending to Irish households fell by 4.5pc and lending to companies by 4.7pc in the year to October. Miss.

10most of the irish banks will be bought by overseas buyers While AIB remains 99.8pc owned by the State, Bank of Ireland's December 2013 new share issue means that the Government's stake has fallen to 14pc while the 35pc shareholding held by overseas investors has increased even further.

Also during the year Irish Life & Permanent's Irish Life Assurance arm, IL&P's only saleable asset, was sold to Great-West Lifeco of Canada for €1.3bn. Partial hit.


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