Closing Bell: Thanking Theresa May, An Post's woes and Cork's opportunity

Thought all was quiet on the business front? Think again, as Vincent Wall examines this week's intriguing developments...

Closing Bell: Thanking Theresa May, An Post's woes and Cork's opportunity

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Thank God for Theresa May!

That was the purely self-centred sentiment, expressed this week by many journalists and news organisations around the country I suspect, rather than a reflection of this column’s views on her political standpoint or on the wider Brexit process.

If it were not for her surprise election announcement on Tuesday, the week after Easter would have copper-fastened its position as one of the least newsworthy periods of the year; right up there with Christmas and the depths of August when those newsmakers who are in a position to, head for the hills with their phones in the off position.

The rise of the renter

We exaggerate, of course. There is always news out there – it just depends on how it’s defined. Other than the developments across the Irish Sea, the principal focus here remained on the housing market with further confirmation from the CSO that nationwide prices are growing at a double-digit lick.

One of the upshots of this pricing dynamic, and of historically high rents, is that we have the lowest ratio of home owners to renters since the 1970s – a scenario that will only change slowly as further supply comes on stream.

Sterling effort

Skipping across St George's Channel again, one of the immediate consequences of the Westminster election announcement for businesses here was the strengthening of sterling against the euro. That 1% gain to just under the 84p level held for the rest of the week, offering some respite for exporters and the tourism sector as we head into the key summer season.

For those firms in a position to hedge their euro/sterling position, there may be further gains for the UK currency over the days and weeks ahead, depending on the perceived and actual outcome of the French Presidential elections.

Of course, any short-term gains that may accrue from a weaker euro, in the event of ultimate victory by Marine Le Pen would be far outweighed by the systemic risk to the existence of euro that her accession to power would trigger.

Semi-state of affairs

Back home again, and the week provided further evidence of the kinds of pressures our commercial semi-state companies face from leaner, non-unionised and targeted competitors. We’ve seen this impact over recent weeks on Bus Eireann, but An Post finds itself in the same crosshairs.

Not only is it challenged by the actual and social costs of a nationwide post office network, but those elements of the postal market that should prove most lucrative – business mail and delivery of online purchases – are subject to increasing competitive attack.

On Monday, CityPost announced it would launch a collection and delivery service directly from the premises of potential business customers, at prices up to 20% below An Post’s latest standard tariffs. Then, it emerged towards the end of the week that the franchised courier firm, Fastway, had attracted a minority equity investment of up to €12m from a dedicated fund, MML, that is part-supported by Enterprise Ireland. 

These developments may represent darkening clouds for the likes of An Post, but suggest that business sentiment generally remains generally positive and reflective  of upgraded economic growth forecasts. This was also signalled in a number of surveys published during the week by the likes of KBC Bank Ireland/Chartered Accountants Ireland and Vodafone.

Amongst the chief sentiments expressed was relief that the anticipated impact of last June’s Brexit vote on the UK economy, and by extension on our own, had not materialised to date.

Cork gets competitive

Confidence too, in the future of Cork city, as represented by the actions of New York-based but Kerry-born developer, Kevin O’ Sullivan. It emerged mid-week that he has not only purchased the key Port of Cork site close to the city’s Custom House but has elaborate plans for its redevelopment including a soaring, elegant multi-storey commercial and residential tower building.

This is exactly the kind of bold statement that Cork should be making about its competitive attitude to the sprawl of Greater Dublin Area and, indeed, to the 21st century. Let’s hope the usual conservative planning mindset does not dilute the O’Sullivan vision to within an inch of its life.

The Cork and wider Munster region are central to the country’s dairy sector, an industry that is witnessing unprecedented growth and investment at farmer and processor level, due to the elimination last year of EU milk quotas.

Big Cheese and Brexit

All the more concerning, then, that the real risk of a hard Brexit and its possible triggering of steep food import tariffs between the EU and UK could represent a terminal threat to Ireland’s cheddar cheese exports to Britain, which absorb up to 20% of our milk output.

The industry stressed this week the need for a government-led strategic plan, supported by all the major dairy processing players, to address this possible outcome.

Only time will tell whether we will continue to thank Theresa May...