Transport and accommodation spending see biggest ever drops

New figures from the Central Bank show that the total value of card transactions (including ATM transactions) decreased by 35% in April – the biggest annual decline recorded since the series began. 

Today’s figures are the Central Bank’s first statistics to capture a full month of data where the Covid-19 emergency containment measures were in effect here.

The figures show that spending on groceries and perishables in April increased by 20% compared with the same time last year. 

But on a monthly basis, spending on groceries declined by 7%, reflecting the stockpiling by consumers in March.

Expenditure on transport and accommodation slumped by 87% and 91% respectively in April  – the largest contractions ever recorded for these sub-sectors – amid the lockdown.

Meanwhile, spending on social sectors such as restaurants and dining and entertainment declined by 71% and 50%, the Central Bank said. 

It also noted that e-commerce spending declined by 4% in April compared to April of last year, but it accounted for nearly half of all retail card spending.

This marked a series high and was up from an average of 39% in 2019.

The Central Bank said that retail card spending (point of sale and credit cards) was relatively stable through the first two weeks of May, after picking up from its low point in mid-April. 

Its latest daily card payments data, up to 22 May, shows that most recent increase in retail card spending coincided with the first phase of restrictions being eased. 

But retail card spending remains 13% lower than spending during the first week of March, it added.

Meanwhile, the value of ATM withdrawals followed a similar trend to retail card spending activity in the last number of weeks.

The Central Bank said that despite recent increases, withdrawals were 44% lower when compared to the first week of March.

The average ATM cash withdrawal amount remained elevated during April and May in comparison with historical averages, which the Central Bank said showed that people are continuing to concentrate their cash withdrawals into a small number of ATM visits.

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Revenue notifies 3,000 taxpayers of text scam

Fraudsters may have accessed thousands of taxpayers’ Revenue accounts using information provided by them unwittingly.

Revenue has written to around 3,000 taxpayers advising them that their myAccount may have been accessed as part of a scam which was sent via text message.

Revenue’s Chief Information Officer, John Barron, explained that Revenue constantly monitors for suspect online activity on all its services and takes action as soon as such activity comes to light.

“For example, where potential phishing websites are detected, we immediately seek to have them taken offline by reputable hosting services,” he said.

Following an investigation by Revenue’s IT Department into this latest scam, a letter has been sent to approximately 3,000 taxpayers to make them aware of its concerns that their personal details may have been accessed, the possible serious implications for them and to set out some practical things they can do to minimise the extent of any fraud perpetrated against them.

Mr Barron stated that “it is important to note that the security of Revenue’s systems has not been compromised in any way.

However, the nature of this particular type of scam has led to some taxpayers unwittingly compromising the security of their personal myAccount profile details by providing information such as their PPS number, date of birth and myAccount password to fraudsters.

This occurred after the taxpayer clicked on a link, in a text sent by fraudsters, which purported to be the Revenue ‘myAccount’ log-in screen.”

If the details provided after clicking the link are valid, the fraudsters then use these details provided by the taxpayer to access the taxpayer’s myAccount user profile screen.

At this stage they may be able to obtain further information including potentially bank details where the taxpayer has recorded these with Revenue.

Mr Barron confirmed that “in order to mitigate any further threat to the accounts that could have been potentially compromised, we are now contacting each of the taxpayers by letter informing them of possible fraudulent activity that may have affected their account.

The letter notifies the taxpayer that Revenue has temporarily deactivated their myAccount access and advises them of important next steps they should follow.”

Revenue regularly reminds taxpayers that it never sends text messages requiring the provision of personal information via links, pop-up windows, reply text or email. 

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Government to bring pandemic payment changes to Dáil next week

Minister for Employment Affairs and Social Protection Regina Doherty has told the Dáil she will bring forward proposals for some changes to the Covid-19 Pandemic Unemployment Payment within the next week or so.

She said that the Government is reviewing the nature of the payment.

Ms Doherty reiterated that the Pandemic Unemployment Payment and the Temporary Wage Subsidy Scheme will be extended beyond the original June end date.

The Dáil today met to approve a revised estimate for the Department of Social Protection in order to continue to fund welfare payments. It passed the revised estimates this evening without a vote.

The department would have run out of money next week because of the Covid-19 welfare payments, unless the additional funding was approved.

Ms Doherty said without the approval, all welfare payments would stop. She told the Dáil that it had become “urgent” to seek the House’s approval for the higher level of expenditure this year.

Tonight, the Dáil approved a Revised Estimate for Expenditure of over €28 billion  to ensure welfare payments can continue.

Minister for Finance Paschal Donohoe said further estimates for the Department of Employment Affairs and Social Protection will be needed later in the year.

Mr Donohoe said the cost of the Wage Subsidy Scheme is contained in this vote.

He said there will be some estimates that will need to be dealt with at the end of June, and the majority will need to be dealt with by the end of July.

Mr Donohoe also said he intends to bring a proposal to Cabinet on Friday to resolve the issue of women returning from maternity leave being excluded from the scheme.

The minister told the Dáil that there are difficulties with how the legislation was drafted, but said he has been working with the Revenue Commissioners over the past two weeks, and he believes they can find a way for mothers who are returning to work to be treated equally.

Fianna Fáil’s Willie O’Dea said TDs were being asked to vote on billions of euro of extra money without information on how long the Covid-19 payments will continue for.

He said the Government was happy to take the “plaudits” for increasing the level of social welfare for people affected by the pandemic, however, he said they wanted to shift the responsibility of taking decisions on how long it will continue. 

He said: “People are looking for certainty minister.”

Mr O’Dea asked if the changes the Government is planning to make will clarify how long the payment will continue for and if it will be tapered, rather than a cliff edge situation, when the payment ends.

Labour TD Ged Nash said it was “unacceptable” that TDs were being asked to provide additional “enormous resources” to the Department of Social Protection without knowing how the money will be spent.

He said they were “historic estimates” and he said around €5bn of the €7bn had already been spent on measures including the PUP – which he said were necessary.

Mr Nash said the people of Ireland were watching the debate closely because they are concerned about their future.

He said it was clear there would be a “massive attempt” to move people from the Pandemic Unemployment Payment on to Jobseeker’s Benefit.

Ms Doherty acknowledged that they were historic estimates, but she said she could not bring forward estimates on the basis of decisions that have not yet been made.

She said the estimates in no way tie the hands of the next Government or restricts its ability to make any changes in how it is spent.

She said she expects there would be a need for another estimate in the early autumn.

Sinn Féin’s David Cullinane accused the Government of delivering “mixed messages” around how long the Pandemic Unemployment Payment will last.

Mr Cullinane said the Government has created confusion. He also claimed there is “unnecessary rhetoric” around the payment being made to people who do not need it.

“The Taoiseach has said on the one hand there is no reason for people to fear, that the current emergency payments will continue as they are,” Mr Cullinane said.

“Then he went on to say that no decision has been made yet, the Cabinet hasn’t made a decision and indeed it might be a decision for a future government or a new government. It can’t be both,” Mr Cullinane told the Dáil.

He also called for clarity on whether pre-election promises that the pension age will not be increased to 67 from next year will be honoured. 

RTÉ News has reported that parties involved in programme for government talks believe that raising the pension age from next January could be difficult to achieve given the changed economic circumstances. 

Mr Cullinane said: “A lot of promises were made on this and we are hearing yesterday that some of these promises are being rowed back on.

“I think that would be absolutely unacceptable and I want to make it very clear that we in Sinn Féin will not resile from our commitment that workers will able to retire at the age of 65 and have the choice to do so,” he said.

Ms Doherty told the Dáil that she wanted to disassociate herself from anybody who has “wrongly intimated that there are people gaming the system”, in relation to accessing the pandemic payment.

“Yes, there is fraud in the system, the same way as there is fraud in every other system in every country. We are catching those people, but they are small numbers. There is nobody gaming the system,” she said. 

Green Party TD Marc Ó Cathasaigh said TDs had very little time to analyse the new estimates for the Department of Social Protection.

He said the estimates would normally have been subject to a Dáil committee, but only landed on TDs’ desks yesterday. 

Deputy Ó Cathasaigh said TDs were being asked to approve spending measures of €6.8bn with only 24 hours to analyse the “enormous” extra costs.

However, he said not passing the measures would put families over a “cliff edge” of funding and was not something that could be considered by the Dáil.

Social Democrat TD Gary Gannon told the House that the message from Government had changed and we are “not all in it together”. 

He said that while the Pandemic Unemployment Payment was always understood to be temporary, it represented an acknowledgment by the State that welfare rates were too low. 

He said many of those who receive the payment work in the gig economy and get the minimum wage.

Ms Doherty also said there will be no “claw back” of pandemic unemployment payments for people such as lone parents, who are getting other allowances. 

The minister was asked about a report in the Irish Examiner which stated that those who are in receipt of the €350 a week emergency unemployment payment, but are also getting welfare payments, will be subject to retrospective means testing. 

The report suggested that they could have to pay up to €1,000 back to the State once they return to work. 

Ms Doherty said: “I don’t know who is leaking, but whoever is leaking is wrong.”  

She said what was suggested in the newspaper report was “shameful and it just won’t happen. I can guarantee you that, for as long as I am here, it just won’t happen”.

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End of June application deadline for bank repayment break – BPFI

Bank customers who require a break from repaying their mortgages or loans because of the impact the Covid-19 crisis is having on their finances will have to apply for one by 30 June, the Banking and Payments Federation Ireland has said.

The BPFI said the deadline has been set by the European Banking Authority.

As a result, the federation is urging anyone who needs a payment break to contact their lender as soon as they can.

The BPFI said 140,000 customers are now on payment breaks. Nearly 80,000 of those relate to mortgages, with almost 36,000 connected to SME loans.

It said banks are now undertaking significant engagement with those whose breaks were issued in March and contacting them to discuss options for when the break comes to an end.

“These include the availability of a payment break extension of up to an additional three-month period for those that continue to be directly impacted by the fallout from the Covid-19 pandemic,” said Brian Hayes, Chief Executive of BPFI.

To support that engagement the BPFI has published a guide to the process.

“The BPFI guide covers a range of vital information for those who have an existing payment break, including the option of getting a payment break extension,” Mr Hayes said.

“It details the different repayment options for borrowers, including the provision of term extensions on mortgages.”

The guide also provides advice for borrowers who think their financial challenges may be longer term in nature and the gives guidance on the next steps to take.

In March, the five main lenders in Ireland all agreed to offer a three-month payment break to any customer who was struggling financially as a result of the impact of the coronavirus emergency.

It was later extended by a further three months in recognition of the seriousness of the crisis.

However, a number of bank bosses have since signalled that a further extension beyond the six months is not likely.

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Foodservice industry could see €5 billion drop in spending

An assessment of consumer spending on food outside the home, such as in restaurants, has found that the sector could fall in value by as much as €5 billion this year as a result of Covid-19.  

Bord Bia, the Irish Food Board, has published a paper which sets out the best and worst case scenarios for the market.

Its worst case forecast for the island of Ireland could see spending fall by 60% from €8.5 billion to just €3.7 billion.

Bord Bia also highlighted five key trends that are likely to have a longer lasting impact on the industry. 

These include streamlined and smaller menus with many operators likely to focus on those items that drive maximum revenue post-crisis.

It also predicts continued investment in take-away services, saying that the Covid-19 crisis has shown that having any off-premise strategy to diversify risk is a must. Digital strategies will become more important to operators of all types.

Bord Bia said there will be decreased emphasis on customisation and made-to-order services due to labour challenges and a move toward low prices among many consumers. 

It also predicts more ghost/delivery kitchen acceleration saying that as the food industry resets, more companies may decide to eliminate the dining room altogether to capitalise on longer-term, off-premise trends.

Bord Bia also forecasts consolidation in the sector with the acquisition of some players throughout the supply chain and risks to more vulnerable operations.

Maureen Gahan, a foodservice specialist at Bord Bia, said that while acknowledging the clear and ongoing damage to the Irish foodservice market, it is also important to begin thinking about how the industry re-starts and what permanent changes may ultimately stick into the future. 

“We understand from listening to food and drink suppliers servicing this market that access to timely data and insights is crucial for them as they look to revise their plans and activities for the second half of 2020,” Ms Gahan said.

She noted that the out-of-home channel was one of the most severely impacted by Covid-19, not just in Ireland, but world-wide, experiencing a near total collapse due to the temporary shutdown of the hospitality sector. 

“However, we also know that it is a hugely resilient industry and we have already seen a number of outlets transitioning their businesses to take-away and home delivery. Similarly, we have seen examples from our food and beverage producers that are pivoting their businesses to meet the new needs of their foodservice customers,” she added.

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EU Commission proposes €750 billion coronavirus recovery fund

The European Commission has proposed a recovery fund of €750 billion, which it says is designed to repair the economic damage caused by the coronavirus pandemic.

According to European Commission President Ursula von der Leyen, the money would be disbursed via grants and loans, with the commission using the EU budget as leverage to raise funds on the financial markets.

After the pandemic hit Europe, there were weeks of division and rancour over the EU’s response, with the worst hit countries accusing richer northern member states of lacking a spirit of solidarity.

The EU has already approved €540 billion in soft loans and supports in its immediate response, but today’s proposal is for the big recovery effort that Europe will need once the pandemic passes.

The plan is that the commission would raise new forms of revenue for its seven-year budget, and then use that money to raise the €750 billion on the markets.

That money would go to the member states, regions and economic sectors worst hit.

The digital economy and the new European Green Deal, designed to make the continent carbon neutral by 2050, would be prioritised.

The idea is that lessons will be learned and extra resources channeled to research and development, and to stockpiling vital medical and personal protective equipment.

But the plans will face formidable opposition from member states such as Austria, the Netherlands, Sweden and Denmark.

They are the so-called “frugal four”, who only want the recovery fund to come by way of loans, which will have to be paid back by member states.

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Coronavirus to hit supply of new housing, I-RES REIT warns

The State’s largest property owner, Irish Residential Properties REIT, said today that the overall supply of new housing and apartments is expected to be impacted by the ongoing restrictions due to Covid-19.

In a statement issued ahead of its AGM today, it said it continued to add to its portfolio with the addition of 73 new apartments in Dublin at Waterside and Tallaght Cross West. 

I-RES REIT said the lifting of restrictions on building sites on May 18 has seen its development sites in Dublin at Hansfield Wood and Bakers Yard reopen.

It also said that it has so far maintained strong occupancy and rent collection levels across its portfolio, adding that it will continue to work “constructively” with its tenants.

Declan Moylan, Chairman of IRES, said that the coronavirus pandemic has created “significant uncertainty” in every aspect of life.

He said the company’s utmost priority remains the health, safety and wellbeing of its officers, employees, residents, shareholders and business partners. 

“The evolving situation presented by the Covid-19 pandemic, and Government restrictions introduced in order to mitigate its spread, could have impacts on the company’s business which we cannot foresee at this time,” Mr Moylan said.

“However, we are confident that the quality of our property portfolio and the strength of our balance sheet provides great resilience during this period and together with the experience of our Board, CEO and IRES Fund Management Limited, position the company well to navigate this challenging future period,” the chairman added.

Today’s AGM is being held at the company’s offices at Hanover Quay today in line with Covid-19 restrictions. Shareholders can listen to the proceedings of the meeting remotely by teleconference.

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Trips to and from Ireland slump by 99% in April – CSO

New figures from the Central Statistics Office show “an unprecedented collapse” in overseas travel to and from Ireland in April as the effects of the Covid-19 crisis deepened. 

The CSO reported just 16,100 arrivals in April and 17,800 departures.

This compares with monthly travel of more than 1.7 million in each direction the same time last year – an annual fall of 99%.

Today’s figures show that of the 16,100 people arriving in Ireland, 75.2% arrived by air and 24.8% arrived by sea. 

Of the 17,800 people departing Ireland, 72.2% departed by air and 27.8% left by sea.

The figures are contained in the CSO’s new monthly release on Air and Sea Travel Statistics. 

The statistics have been introduced to provide data on passenger numbers, in the absence of the CSO’s monthly tourism surveys. 

The CSO suspended the collection of the tourism surveys at air and sea ports in March, because of the Covid-19 situation.

Today’s figures are based on information provided by the airports and sea ferry operators themselves.

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Significant stimulus plan needed to revive economy after Covid-19 – IFAC

The Government has been advised to introduce a “significant” stimulus plan for the economy, once the immediate Covid-19 crisis is over.

However, the Irish Fiscal Advisory Council (IFAC|) has also warned that “all options must be kept on the table”, including spending cuts and tax rises to bring the public finances back in line once the recovery takes hold.

Covid-19 will deliver a “prolonged and severe shock” to the economy, according to the council, which acts as a watchdog for the public finances.

That is why it is advising the Government to implement a “significant” plan of investment to stimulate the economy back to life. But this will have to be paid for.

It is advising an incoming Government to leave “all options” on the table through “different combinations of spending reductions and tax increases” to bring the public finances back from what is expected to be “historic” levels of public debt.

However, the council says that even under its worst case scenario of repeated new waves of coronavirus, the expected adjustment will be less than half of what was done following the financial crisis.

Speaking on RTÉ’s Morning Ireland, Sebastian Barnes, the acting chairperson of the IFAC, said that Government actions taken so far to tackle the Covid-19 crisis have been appropriate given the quick, sharp shock to the econmy and a 20% fall in economic activity in the first half of the year.

He said “it was absolutely right” given the disruption for Government to use the balance sheet quickly and to put a lot of money into the economy to ensure businesses could survive and to support people to make it through the lockdown.

The IFAC says there is considerable uncertainty surrounding the impact of Covid-19 on the economy. It also warns that the threat of a hard Brexit, changes to international tax rules and disruption to world trade all remain as risks to the economy.

It has sketched out the path it thinks the economy could take under three different scenarios which vary from “Mild” to “Severe”. The greatest uncertainty is what will happen to the virus and its impact on public health. It believes that it will take two to three-and-a-half years for activity to return to pre-Covid levels.

It recognises the high cost of income and business supports put in place by the Government but says these will help limit the economic damage.

When the economy begins to recover, it warns that some sectors like tourism and food services may struggle. It warns that some job losses may be permanent and workers may need to be retrained.

Mr Barnes said that whatever combination of spending reductions or spending freezes and tax changes are needed, it will not be on the scale the country had in 2008 to 2010 and the Council says a return to severe austerity can therefore be avoided.

It supports a “significant” stimulus plan for the economy once the immediate crisis is over. It will not put a figure on this but it uses a model of €10bn over several years to show its possible impact on the public finances.

It says the stimulus should be ‘temporary and targeted’. It also says that once economic growth picks up again, the Government will have to move to bring the public finances back from what it expects will be “historic” levels of debt.

This could involve adjustments of between €6bn and €14bn over the years 2023-2025. It warns that an incoming government will have to leave all options regarding spending and taxation open to deal with this.

Even with this adjustment, IFAC sees the Government still running budget deficits out to 2025 which could range between €3bn and €11bn depending on how the economy fares.

It warns that although interest rates are low now, Ireland had a high level of debt going into this crisis and that an even higher level of debt leaves the country “vulnerable to further shocks in the future”.

It is encouraging an incoming government to set debt targets, set realistic medium-term budgetary forecasts and save any temporary gains from unexpected windfalls in a re-jigged Rainy Day Fund.

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Economic confidence up in May but remains weak overall

Consumer and business sentiment rose slightly in May, albeit from a low base according to the latest Pulse survey from Bank of Ireland.

Consumer confidence was up marginally in the month, while all sectors of business saw an improvement. That came as improving data on the number of Covid-19 cases in Ireland continued to improve, while the Government roadmap offered a way forward for the country.

However the index remained low overall, having only recovered slightly from the record low seen in April.

“The Covid-19 shock is still keenly being felt by households and firms, what our May survey shows though is that the sudden and severe blow to sentiment may have bottomed out,” said Loretta O’Sullivan, chief economist with Bank of Ireland.

“When we look at what’s behind that, it looks as though efforts to contain the spread of the virus are bearing some fruit and the Government has set out a timetable to help society and business get up and running again.”

That appeared to have offered a light at the end of the tunnel for consumers and firms, making them feel slightly better about their prospects as a result.

“Households and firms are hoping that, as the restrictions are gradually lifted over the summer, the economy begins the process of healing and this has led to less pessimistic readings over the month,” Ms O’Sullivan said.

However the majority of consumers remained apprehensive about expenditure – with just one in six saying they were planning a ‘Big Ticket’ purchase.

At the same time three quarters said they would save over the next year – which could help lead to a spending boom eventually, though only if conditions allow.

“There may be pent up demand for certain goods and services, but there may also be some nervousness in the absence of a vaccine or in the absence of a treatment for sectors where there is more social contact,” Ms O’Sullivan said.

Some types of business that are more vulnerable to the spread of the virus are likely to see the least gain as things return to some level of normaility, with Ms O’Sullivan warning that the recovery will likely differ across sectors.

That is reflected in the Pulse data, with the services sector – which includes hospitality – more pessimistic than most.

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