Monthly mortgage approvals rise by 14% in August

New figures from Banking and Payments Federation Ireland show that the monthly growth trend in the number of approved mortgages continued in August, while they continued to be lower on an annual basis.

The BPFI figures show that a total of 3,875 mortgages were approved in August. This marked an increase of 14.1% from July but a fall of 11% compared to the same time last year.

First-time buyers were approved for 2,259 mortgages – 58% of the total volume – while mover purchasers accounted for 1,000 (26%) in August, the BPFI noted.

Mortgages approved in August 2020 were valued at €946m, of which first time buyers accounted for €556m (59%) and mover purchasers for €267m (28%).

The value of mortgage approvals rose by 16.7% on a monthly basis but were down by 2.3% on an annual basis.

Dr Ali Ugur, BPFI’s chief economist, said that after a strong uplift in mortgage approval activity in July compared to the previous month, this increase in August provides a much improved pipeline for mortgage drawdown activity in the months ahead, despite the fact that overall activity is still down year on year.

Dr Ugur noted that actual mortgage drawdowns were down by around 18% year-on-year in the first half of 2020, adding that this was not a surprise in light of Covid-19. 

“But, if recent approvals convert into drawdowns as they normally do, we could expect to see a better outcome than originally estimated back in April/May,” he said.

“It’s also interesting to note that when we compare first-time buyer mortgage approvals in August 2020 to the same period last year, there was a higher number both in terms of value and volume. Given that 58% of all approvals are to FTBs, we could expect to see that important category continue to be the single largest element of the market,” he added.

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EU rebuffs UK attempts to accelerate trade talks

The EU has rebuffed attempts by the British government to intensify and accelerate negotiations in order to reach a future trade agreement by mid-October, RTÉ News understands.

The ninth round of future relationship negotiations gets underway tomorrow in Brussels, with both sides at odds over the prospects for a breakthrough.

Late last week Downing Street briefed journalists that there was growing optimism about progress in the future relationship negotiations, with just weeks of talks remaining.

It is understood that during informal discussions the UK’s chief negotiator David Frost pushed his opposite number Michel Barnier for the process to enter, as soon as possible, the so-called tunnel, the final period of sealed negotiations preceding a future relationship treaty.

However, two senior sources have told RTÉ News that Mr Barnier refused to agree to such an intensification for two reasons.

First, the EU believes the UK has still not made sufficient concessions on the so-called level playing field, including the question of state aid, and fisheries.

Secondly, Brussels believes the deadline is the end of October, not 14 October, the deadline that British Prime Minister Boris Johnson has set, which is when EU leaders will meet for a summit.

Meanwhile, London and Brussels will discuss the controversy over the Northern Ireland Protocol at a meeting of the EU-UK Joint Committee in Brussels later this morning.

The European Commission is expected to push the UK for more details on the implementation of the Northern Ireland Protocol, which is supposed to come into effect on 1 January.

Brussels is concerned that the construction of Border Control Posts, required by the Protocol, has not yet started. 

London, however, wants the EU side to commit to simplifying some of the checks and controls the Protocol requires on goods moving from Great Britain and Northern Ireland, and in the other direction.

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More than 1,300 businesses sign up for ‘Stay and Spend’ scheme

More than 1,300 businesses have registered for the Government’s Stay and Spend initiative, which aims to get people spending locally after the Covid-19 pandemic all but wiped out foreign holidays this year.

However, there are significant differences in the number of businesses signing up in different areas of the country.

About 350 of the total registered by last night were in the Dublin region, but Dublin 10 was home to only one of those. At the top end of the scale, there were 88 in Dublin 2.

Cork was the county outside the capital with the highest number of registrations at 154.

The initiative, which begins on October 1, allows an individual to claim back up to 20pc spent on food or hospitality.

A maximum of €125 in income tax credits can be claimed on submission to Revenue of receipts. This would mean a total spend of €625 by the individual in the sector. All submitted receipts must be for a minimum of €25 and alcohol is not included.

A company must be registered with Revenue for the scheme for its customers to be able to claim the money back.

Among the variety to have already done so are coffee chain outlets such as Costa, which has four branches registered in Dublin 18 alone, and upmarket hotels such as Castle Leslie in Co Monaghan.

Businesses on the islands, which were hard hit by the absence of a summer holiday season, are also looking to take advantage of the scheme, such as Joe Watty’s on Inis Mór in the Aran Islands.

Micheál Carrigy, Fine Gael’s tourism spokesperson in the Seanad, urged hotels, restaurants, bars and cafes that have not yet signed up to do so.

He pointed out that customers were more likely to visit a business taking part and called for an official advertisement, such as a sticker, to be used by a business to alert ­customers it was registered.

“It’s about stimulating spend in the local economy and giving incentives for people to stay in Ireland, staycation, eating out, getting these businesses back on their feet,” he told the Irish Independent.

“You’re more likely to go to somewhere that’s registered than not.

“It’s important that business know this,” he said.

“We want people out in the local economy, keeping jobs in the local economy and be able to benefit from their tax by keeping receipts where they spend.”

Graeme McQueen of the Dublin Chamber of Commerce said the numbers signing up in the city centre, compared with the suburbs, reflected how businesses there are especially concerned about their survival.

“Those figures mirror what we’re hearing and seeing in Dublin.

“The hospitality and retail sectors have been worse hit in the city centre than in the suburbs, so it’s not surprising to see there is more interest in the support from centrally located businesses which have seen footfall collapse,” he said.

“With tourism activity in Dublin all but wiped out over the past few months, and with very few office workers around, it remains a very tough environment for retail and hospitality businesses in the city centre.”

He encouraged all eligible business to register to ensure they’re taking advantage of all supports that are available.

“These supports could make the difference between a company surviving and being able to retain jobs over the coming months.”

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EU rebuffs UK attempts to accelerate trade talks

The EU has rebuffed attempts by the British government to intensify and accelerate negotiations in order to reach a future trade agreement by mid-October, RTÉ News understands.

The ninth round of future relationship negotiations gets underway tomorrow in Brussels, with both sides at odds over the prospects for a breakthrough.

Late last week Downing Street briefed journalists that there was growing optimism about progress in the future relationship negotiations, with just weeks of talks remaining.

It is understood that during informal discussions the UK’s chief negotiator David Frost pushed his opposite number Michel Barnier for the process to enter, as soon as possible, the so-called tunnel, the final period of sealed negotiations preceding a future relationship treaty.

However, two senior sources have told RTÉ News that Mr Barnier refused to agree to such an intensification for two reasons.

First, the EU believes the UK has still not made sufficient concessions on the so-called level playing field, including the question of state aid, and fisheries.

Secondly, Brussels believes the deadline is the end of October, not 14 October, the deadline that British Prime Minister Boris Johnson has set, which is when EU leaders will meet for a summit.

Meanwhile, London and Brussels will discuss the controversy over the Northern Ireland Protocol at a meeting of the EU-UK Joint Committee in Brussels later this morning.

The European Commission is expected to push the UK for more details on the implementation of the Northern Ireland Protocol, which is supposed to come into effect on 1 January.

Brussels is concerned that the construction of Border Control Posts, required by the Protocol, has not yet started. 

London, however, wants the EU side to commit to simplifying some of the checks and controls the Protocol requires on goods moving from Great Britain and Northern Ireland, and in the other direction.

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Sterling edges higher after Sunak announces new job support scheme

Sterling edged higher today after British finance minister Rishi Sunak announced a new job support scheme, but said the government won’t save every job. 

Against the dollar, sterling was up 0.2% at $1.2751, after hitting a two-month low of $1.2676 yesterday.

Against the euro, sterling was up 0.2% at 91.4 pence. 

In a choppy session, the pound remained above $1.27 on the overall picture of more government support to rescue businesses and jobs.

But fears that unemployment will rise when the furlough scheme ends next month kept investors nervous. 

As Sunak said the British government will support only viable jobs, “the main question is who is going to determine what is the definition of a viable job,” said Naeem Aslam, chief market analyst at AvaTrade.

Investors are also keen for clues as to whether the Bank of England intends to cut interest rates to below zero. Bank of England governor Andrew Bailey is due to speak later today. 

Sterling has lost 4.4% against the dollar in September so far, and is on course for its worst month since October 2016, as talks of negative rates, the looming risk of a no-deal Brexit and new lockdown measures weigh down the currency. 

Earlier this week, Prime Minister Boris Johnson told British people to work from home where possible and ordered restaurants and bars to close early. The new measures could last for six months, he said. 

Sterling gained some support from renewed hope the European Union and Britain can reach a Brexit trade agreement by the end of a transition period in December after two of the most powerful players in the negotiations said they were determined to strike a deal. 

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Living with Covid requires long-term government support – Chambers Ireland

A new survey from Chambers Ireland shows that companies are still reporting a 32% decline in turnover despite the re-opening of most of the economy after the Covid-19 restrictions.

The new Chambers Ireland survey captured over 860 responses during the lead up to the imposition of new restrictions on activity in Dublin. 

The survey found that business activity is typically down 32% across the sample, though with strong business-size and sectoral effects. 

It also said that revenue expectations over the coming quarter is expected to be 36% below baseline.

Chambers Ireland Chief Executive Ian Talbot said today’s data captures what the economy looks like while the virus was under control. 

“Significantly, even during circumstances where the outlook is relatively stable and the economy is mostly open, businesses are telling us that, on average, they envisage turn-over to be 30% less than this time last year. Some sectors are suffering significantly worse than other, but no sector can is considered to be doing well,” Mr Talbot said.

He also said the results of the survey supports the theory of a more “K-Shaped” recovery, where larger firms are doing badly relative to a normal year, but SMEs are impacted significantly more. 

“This may have to do with the predominance of SMEs in affected sectors, but the regional effects are important too,” Mr Talbot said.

Chambers Ireland said that in line with an ESRI’s report on SMEs last week, the debt burden for SMEs is growing. Sole traders believe they will only be able to service 48% of their debt that falls due over the coming 12 months, it added. 

Meanwhile, liquidity is likely to continue proving to be a problem for many businesses as considerable outstanding invoices are beginning steadily build up.

The burden is being felt hardest by smaller businesses with as many as 50% of microenterprises saying they are having difficulty receiving payments for outstanding invoices, today’s survey noted.

Chambers Ireland said the current “Living with Covid-19” strategy is set to last for the next six months, but in all likelihood, we will be living with the economic impact of the coronavirus for more longer.

Supports introduced to date have been valuable in sustaining business through the first wave, but it is likely that much more will be needed over the coming months, Chambers Ireland cautioned.

It also said that forbearance and flexibility from state agencies, banks and landlords must also continue to play a significant role in how the business community and the wider society is supported.

“It is in nobody’s interest to see liquidations, business closures and increased vacancies in towns and cities throughout the country,” it added.

Chambers Ireland said its members across the network understand the importance of protecting public health through reducing contacts and avoiding circumstances where people congregate. 

“But this has a cost, and the business community cannot bear this alone. Supports introduced to date have been valuable in sustaining business through the first wave. However, it is likely that much more will be needed over the coming months,” it added.

It said the state’s highest priority needs to be assigning sufficient resources to ensure that contact tracing and testing becomes effective at limiting the spread of this disease. “This has to become an imperative if we are to avoid large-scale community outbreaks,” it stated.

“If protecting livelihoods is the objective, then Government, through Budget 2021, must recognise what the business community has come to understand, Covid-19 will be with us for some time, and every part of our society needs support,” Chambers Ireland stated.

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Economic outlook ‘less dire’ than forecast – IMF

The global economic outlook is less bleak than in June, an IMF spokesman has said, signaling that the organisation’s forecast will be raised when it is released next month.

“The recent incoming data suggests that the outlook may be somewhat less dire than at the time of the (World Economic Outlook) update on June 24 with parts of the global economy beginning to turn the corner,” said International Monetary Fund spokesman Gerry Rice.

But the spokesman said “the outlook remains very challenging,” with emerging markets other than China facing a “precarious” situation due to the coronavirus.

As the coronavirus has moved through the world, economists have been forced to constantly revise their forecasts.

In June, the fund projected world GDP would drop by 4.9% and that the virus would wipe out $12 trillion over two years.

The IMF is set to update its global outlook on 13 October. 

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Third of employers no longer need all of their office space

More than a third of Irish businesses are looking to reduce their office space in the wake of the Covid pandemic.

A survey of 325 executives by the Institute of Directors in Ireland (IoD) offers fresh evidence that commercial office owners face rising vacancies and falling demand as more companies expect more staff to work from home long term.

Of those surveyed 14pc plan to reduce their current office space, while another 21pc are considering it.

The IoD’s previous survey three months ago put those figures at 2pc and 19pc, respectively. The shift reflects executives’ growing acceptance of remote working as a long-term feature.

Asked where their staff would be located at the end of the year, 38pc said most employees will still work from their homes.

Three months ago, only 18pc expected this.

And 12pc said they now expect that all of their staff will be working from home at the end of the year, compared to just 5pc who thought so in June.

The mirror opposite was the case for executives expecting staff to return fully to offices. Only 5pc said they thought this would happen by the end of the year, down from 12pc.

“The ways and means of working are undergoing a quiet revolution,” said IoD chief executive Maura Quinn. “Remote working and increased use of digital technology are transforming how we work,” she said, adding that “it is clear that, for many, there will be no return to the old ways of working”.

Earlier this month, commercial property advisor HWBC forecast that less than 2 million square feet of Dublin office space would be let this year – the lowest level since 2012. Lessors increasingly are accepting shorter contracts or offering enhanced discounts, including the first year free, to secure 10-year leases.

Reflecting that weakening demand, Google – which says its staff worldwide can work from home through at least July 2021 – withdrew from its deal to lease the 202,000 sq ft Sorting Office development on Grand Canal Dock.

The survey found that the pandemic was spurring accelerated adoption of digital technologies at 88pc of firms.

Many executives said they found working from home a personal positive.

While a third reported no change to their work-life balance, 42pc said that balance had improved since they exited the office, while 23pc said it’s gotten worse.

Dublin is now on what is called a “level 3” lockdown due to rising infections.

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Sterling extends losses after new Covid-19 UK restrictions

Sterling extended its losses against the dollar and euro today, and is having its worst month in four years.

This is due to new coronavirus lockdown measures, the looming risk of a no-deal Brexit and as talk of negative rates weigh on the currency. 

British Prime Minister Boris Johnson ordered restaurants and bars to close early and told British people to work from home where possible, in new measures which he said could last for six months. 

The pound fell on the news, dipping below its 200-day moving average overnight, with losses compounded by a bounce back in the dollar, which has seen cable fall for three days straight. 

“This is another negative impacting already grim UK prospects, which however remain primarily driven by developments in EU-UK negotiations – where we have so far seen very little progress,” ING strategists wrote in a note to clients. 

The possibility of a no-deal Brexit is also weighing on the pound, although Britain has said it believes a trade deal is still possible. 

Arriving in London for informal Brexit talks, the European Union’s chief negotiator said he was determined to get a deal. 

Boris Johnson is close to getting parliamentary approval for his Internal Market Bill, which angers the European Union by breaking the Withdrawal Agreement struck in January. 

Sterling was at $1.276 today, having hit a two-month low of $1.2677 earlier. It has lost 4.8% so far in September, making this the pound’s worst month since 2016. 

Against the euro, it was down around 0.3%, at 91.6 pence per euro, in its fifth consecutive day of losses.

British PMI data indicated the recovery from the first coronavirus lockdown lost momentum in September. 

UBS Global Wealth Management wrote in a note to clients that a no-deal Brexit cannot be ruled out and would push the pound down to $1.25. 

Analysts also say the possibility of negative rates is a downside risk for sterling. 

Bank of England Governor Andrew Bailey said this week that the bank’s latest policy statement did not imply it would necessarily use negative interest rates, and that observers should not read too much into it. 

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Warning that some goods could double in price with Brexit

The Irish Road Haulage Association is warning trade will be “severely upset” because of Brexit and the price of some goods could double in price.

President of the Irish Road Haulage Association Eugene Drennan said there could be a delay in delivering some goods and scarcity of products, which would not be acceptable.

He told RTÉ’s Morning Ireland that any hiccup with the landbridge through Britain could create havoc, resulting in thousands of trucks “stacking” on the M20 motorway before Dover.

Mr Drennan most Irish imports and exports to continental Europe still use this landbridge but this will have to change if there is chaos in the UK.

He called for a daily, fast, efficient service into northern France ports.

Northern Ireland Policy Manager with the British Road Haulage Association John Martin said the road haulage association in the UK has been lobbying from day one, calling for clarity to be provided in a timely manner to allow companies time to implement their systems procedures.

Mr Martin said the government has failed to deliver a smooth ending of the transition period, despite this extensive lobbying.

He told Morning Ireland that no one knows the detail of the Northern Ireland protocol.

Mr Martin said it is a finely balanced industry, particularly for fresh products such as vegetables.

The sector and businesses cannot afford, he said, two days sitting in a car park in Kent.

The UK’s Road Haulage Association has said requiring hauliers to obtain special permits to enter Kent from neighbouring counties will be “pointless”.

RHA policy director Duncan Buchanan said the measure aimed at avoiding post-Brexit gridlock is simply a “tick box exercise”.

British Cabinet Minister Michael Gove told the Commons yesterday that the permits could help avoid queues of up to 7,000 trucks seeking to cross the English Channel after the UK leaves the single market and customs union at the end of the year.

The Kent Access Permit (KAP) system could be enforced by police or the use of cameras monitoring the number plates of vehicles entering the county at points such as the Dartford Crossing bringing freight from Essex.

But Mr Buchanan said he was involved in a recent test of the system which indicated that KAPs will be issued to all lorry drivers who claim their paperwork is in order, without any checks carried out.

He told the PA news agency: “It’s an honesty box system. It’s not an effective system to actually guarantee or ensure that someone is ready to cross the border.

“It doesn’t do that. It is just a logging system for someone to say ‘I am going to the port and I promise I’m ready’.

“It doesn’t really do much more than that.”

He added: “It’s not asking for reference numbers or anything like that. It is super basic. Thankfully the bureaucracy involved is negligible, but the function is also negligible.

“The entire system is pointless and probably counterproductive.”

Mr Buchanan said ministers “should be focusing” on completing the new Goods Vehicle Movement System, which is being developed by the UK’s Revenue and Customs to enable goods to be declared before they reach the border.

“That’s not going to be ready for January 1, that’s already been made public,” he explained. “That is the system that we actually need to be up running and working to make sure that the border can operate and function properly.”

Mr Gove, the minister responsible for preparing the UK for leaving the European Union’s economic structures, set out the KAP system as he outlined “reasonable worst-case scenarios” that could emerge from January 1.

A lack of preparation for the end of the transition period could result in as many as 70% of lorries being turned back from France, with thousands of goods vehicles waiting up to 48 hours to reach Dover as a result of the chaos.

Mr Gove said: “We want to make sure that people use a relatively simple process in order to get what will become known as a Kent Access Permit, which means that they can then proceed smoothly through Kent because they do have the material required.”

If they do not have a permit, Mr Gove said that through “policing, ANPR (automatic number-plate recognition) cameras and other means” the UK government would do its “very best” to ensure people in Kent are not inconvenienced.

Mr Gove’s announcement came as the EU’s chief negotiator Michel Barnier was in London for informal trade talks.

Downing Street warned time was running out to reach a post-Brexit trade deal which could be in place by the end of the year.

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