Syndicated Archives - Devine Accountants

Services sector suffers significant setback due to Covid-19 outbreak

The services sector here suffered a significant setback due to the Covid-19 outbreak last month, with both activity and new work falling at the fastest rate since April 2009. That is according to the AIB Ireland Services Business Activity Index, which fell from 59.9 in February to 32.5 in March.

It found that new business from international markets dropped more than in any month since the series began in June 2002.

The survey also found that companies in the services field cut staff at the fastest rate since January 2012, reflecting the weakest expectations for activity in the sector since the first poll took place in May 2000.

“The Services PMI has sank far below the key 50 level that signals a move into contraction territory,” said Olive Mangan, Chief Economist at AIB.

“The very sudden and rapid deterioration in business conditions in March is in line with that seen in flash PMI surveys for other countries.”

Both domestic and export new orders imploded, he said, which suggests activity levels could remain low for some time.

Expectations for activity in 12 months’ time fell to their lowest level in the 20-year history of the survey, he added.

The weakest contraction in activity was in transport/tourism/leisure as the hospitality industry ground to a halt.

It registered its worst decline since February 2009.

Business Services was the sector that suffered the next largest decline.

“PMI data also show that manufacturing contracted in the month,” Mr Mangan said.

“Thus, there is little doubt that recessionary conditions have gripped the Irish economy.”

Article Source: Click Here

Number of properties for sale takes nosedive

The availability of property for sale on the market has taken a nosedive as a result of the Covid-19 emergency, with the number of houses for sale dropping significantly.

Between 15 and 28 March there were just 1,300 properties posted for sale across the country, according to property website daft.ie.

That represents half the total of the same period one year ago.

“This is likely to continue as long as everyday life is suspended in Ireland, with consequences for the number of transactions that will take place in the second half of the year,” said Ronan Lyons, economist at Trinity College Dublin.

“The last few weeks have changed the prospects for the Irish housing market entirely, with the Covid-19 pandemic reaching Ireland and completely disrupting everyday life for weeks and possibly months to come.”

The stock of available properties to buy had already been falling prior to the arrival of the Covid-19 pandemic here. 

At the start of March there were 19,900 properties for sale on the Daft platform.

This represents a 12% reduction compared to the same point a year ago, and the seventh consecutive month where stock on the market had dropped.

It is also the first time since late 2006 that there were less than 20,000 homes available to buy.

The supply situation was worst in the capital where the “for sale” stock has fallen by a fifth in the last 12 months. 

Publishing its House Price Report for the first quarter, the website said the pandemic had reached Ireland too late in the three month period to have a meaningful impact on asking prices.

They rose 2.2% between January and March, although they still ended the first quarter 1.7% lower than a year ago following two consecutive quarterly falls at the end of last year.

Exactly what impact the Covid-19 restrictions will have on prices during the current quarter is as yet uncertain.

“The scale of the fall in prices is still unclear at this point,” said Mr Lyons.

“In such uncertain times, the first reaction will be through quantities, not prices, with both buyers and sellers holding off until the future becomes a little clearer.”

Daft.ie said average list prices in Dublin city fell 2.6% to €372,579, with prices in Galway falling by a similar amount.

Prices did rise slightly in Limerick and Waterford cities.

Article Source: Click Here

Euro zone business activity collapses in March as coronavirus spreads – PMI

Euro zone business activity collapsed last month as attempts to contain the coronavirus pandemic pushed governments to shut down vast swathes of their economies, from shops to factories to restaurants, a survey showed today. 

The pandemic has infected more than a million people worldwide, paralysing economies as consumers worried about their health and job security stay indoors and rein in spending. 

IHS Markit’s final Composite Purchasing Managers’ Index plummeted to a record low of 29.7 in March from February’s 51.6.

This was lower than the flash reading of 31.4 and marking by far its biggest one-month drop since the survey began in July 1998. The 50 mark separates growth from contraction. 

“The data indicate that the euro zone economy is already contracting at an annualised rate approaching 10%, with worse inevitably to come in the near future,” said Chris Williamson, chief business economist at IHS Markit. 

That was borne out by the survey as demand fell at the fastest rate on record. The new business index sank to 27.7 from 51.2, much weaker than the flash reading of 29.5. 

Like their manufacturing counterparts, activity in the bloc’s dominant service industry also almost ground to a halt. 

Its PMI dropped to a survey-low of 26.4 from February’s 52.6, below the preliminary estimate of 28.4. 

“The service sector is currently seeing an especially severe impact from the COVID-19 outbreak, with travel, tourism, restaurants and other leisure activities all hit hard by virus containment measures,” Williamson said. 

With the lockdowns likely to last for some time, optimism has all but dried up. 

The services business expectations index almost halved to a survey low of 33.5 from 61.3, more than eight points below its previous record low set in November 2008, just as the euro zone debt crisis was taking shape.

Article Source: Click Here

Dublin is fifth most expensive city to rent in Europe – report

Dublin remains in the top five most expensive cities to rent in Europe, according to the latest Accommodation Ranking report by ECA International. 

With rental costs up €207 on average per month from last year, it is one of the steepest rental rises in the ranking (6%), making it more expensive than other major European capital cities. 

Rent in the capital is now on average €3,613 per month, making it more expensive than many other major European capitals, such as Paris at €3,461, Berlin at €2,354, and Madrid at €2,393, the report states.

Alec Smith, Accommodation Services Manager at ECA International, said: “Dublin has once again seen one of the steepest year-on-year increases of rents in Europe, at just over 6%.

“The increase is partly due to the continuing increase of international companies relocating staff to the city, elevating the demand for expatriate-standard housing.”

ECA’s annual rental accommodation report analyses the rental prices for a mid-market, three-bedroom home in areas commonly inhabited by expatriates.

London continues to hold the top spot for the most expensive rental accommodation in Europe for expatriates, with an increase of £121 per month. The average cost of a three-bedroom, mid-range home for expatriates is now £5,308 per month (€5,963).

A growing population and an increase in Airbnb rental properties has caused rental accommodation prices to continue to rise in Edinburgh, according to the report. The average cost of a three-bedroom, mid-range home in the Scottish capital has risen by £106 per month, up to £1,635 (€1,836)), the highest in over five years.

Cyprus saw the biggest rise in expatriate rental costs in Europe, with Limassol’s rent up €128 per month (€1,058) and Nicosia up €120 a month (€1,079).

Many German cities also saw big jumps in the average rent, with Munich, Berlin and Stuttgart all seeing increases of over 6% from last year.

The report says the US has become considerably more expensive for expats with nearly all US cities in the rankings having risen, some considerably.

The US now has three cities in the global top ten, these being New York, San Francisco and Miami, as the strength of the US economy endures, with the dollar gaining against most major world currencies.

Hong Kong has been named the most expensive location in the world for expat accommodation, for the third year in a row, with the average monthly rent standing at (US) $11,318, (€10,282) an increase of over 3%.

Top 10 most expensive cities to rent in Europe:

London
Zurich
Moscow
Geneva
Dublin
Paris
Kiev
Copenhagen
Luxembourg City
Amsterdam

Top 10 most expensive cities to rent in the world:

Hong Kong
New York
Tokyo
London
San Francisco
Port Moresby
Shanghai
Miami
Buenos Aires
Yokohama

Article Source: Click Here

European shares tumble as more coronavirus impacts revealed

European shares fell this morning in their first trading session of the quarter, as dismal economic data from Asia underpinned the ongoing damage from the coronavirus pandemic and fanned fears of a deep global recession. 

The pan-European STOXX 600 index was down 2.4% in opening trade.

It ending with its worst quarter in 18 years yesterday as lockdown measures to contain the virus outbreak upended business activity, raising the threat of corporate defaults and mass layoffs. 

Figures today showed factory activity contracting across most of Asia in March as the outbreak paralysed supply chains, with sharp falls in export power-houses Japan and South Korea overshadowing a modest improvement in China. 

London’s FTSE 100 index slumped 3.7% in opening trade as a number of UK banks joined European peers in suspending dividend payments to shore up liquidity, while the Frankfurt DAX slid 3% and the Paris CAC 40 lost 3.2%.

Dublin’s ISEQ index was opened with heavy losses this morning, falling by 3.4%.

Earlier in Asian trade, Tokyo’s Nikkei index tumbled 4.5%, in line with an Asia-wide sell-off fuelled by concerns over the coronavirus outbreak.

Article Source: Click Here

Manufacturing posts sharpest ever monthly drop in March

Factory activity here posted its sharpest ever monthly drop in March as the coronavirus pandemic disrupted supply chains and caused a collapse in demand, a survey showed today. 

The AIB IHS Markit manufacturing Purchasing Managers’ Index (PMI) fell to 45.1 from February’s 51.2, its worst reading since May 2009.

The figure was also well below the 50 mark that separates expansion from contraction. 

The month-on-month drop, at 6.1 points, was the largest since the survey began in May 1998, surpassing the 5.7 point fall recorded in February 2009 as the global financial crisis raged, the survey’s authors said. 

The new orders sub-index plunged a record 14.1 points to 38.2 from 52.3 in February, while the 12-month outlook for production was the worst on record. 

Today’s index also showed that manufacturing employment declined for the fourth time in five months in March, while the rate of job cuts at the sharpest pace since July 2009. 

Firms blamed job losses on cancelled projects, a lack of activity and difficulties finding replacements for leavers. 

“The PMI data confirm that there was an abrupt and steep fall in manufacturing in March,” AIB’s chief economist Oliver Mangan said. 

The economist said the impact of the virus was not just seen in falling orders and output, but pointed out that employment in manufacturing fell at its fastest pace since July 2009. 

“Purchasing activity also declined at the quickest rate since September 2011. Cancelled orders and weak demand saw depleting levels of outstanding business as firms worked
through backlogs,” Oliver Mangan said. 

“There were also unprecedented delays in the delivery of inputs as a result of disruptions to global supply chains. Meanwhile, both input and output prices fell marginally on
weakening global trends,” Mr Mangan said.

He also predicted that further sharp falls in the PMI are likely over the next couple of months – the Irish index troughed at below 35 during the last recession in 2008-09. 

Noting that new orders collapsed in March, he said that signalled that further declines in output are on the cards.

“Worse is to come, but there is also scope for a sharp rebound in activity when the coronavirus pandemic abates,” the economist added. 

A six-year expansion in manufacturing came to an end in June as a slowdown in global trade and uncertainty over Brexit finally caught up with manufacturers in the bloc’s fastest-growing economy.

Article Source: Click Here

Commission approves Government’s €200m scheme to support firms during Covid-19

The European Commission has given the green light to the Government’s €200m scheme to support firms through the Covid-19 outbreak. 

The commission has found the plan to be in line with EU state aid rules under the temporary framework it has put in place to support the European economy through the crisis. 

“With this €200m Irish scheme, approved under the new State aid Temporary Framework, we continue to work with Member States to ensure timely support to the economy through these difficult times,” said Executive Vice-President Margrethe Vestager. 

“This measure will, in the form of repayable advances, help companies affected by the coronavirus outbreak to weather this crisis and bounce back strongly afterwards,” Ms Vestager said. 

The scheme will allow firms here to access loans if they are experiencing or expect to experience a drop in turnover of at least 15% due to the virus outbreak. 

Companies must have ten or more full time employees and be in certain manufacturing sectors and/or internationally traded sectors. 

Minister for Business, Enterprise and Innovation Heather Humphreys has welcomed the approval for the scheme, which will be administered by Enterprise Ireland as part of a suite of emergency supports to help Irish companies that are seriously and adversely affected by the Covid-19 pandemic. 

In a statement, the Minister said the support will be available to assist companies access the necessary liquidity and funding to sustain their businesses in the short to medium term.

According to the Commission today, the Irish plan is necessary, appropriate and proportionate and will contribute to managing the economic impact of the coronavirus here. 

Under the temporary rules adopted by the EU Commission to give member states more leeway when it comes to offering state aid to companies, grants of up to €800,000 may be given to a company to address its urgent liquidity needs. 

Member states can also provide guarantees to ensure banks continue to provide loans and may also provide subsidised public loans to firms. 

Short-term credit insurance can also be provided as well as safeguards for banks that channel state aid into the economy. 

Article Source: Click Here

€9m more to be paid out in Covid-19 wage subsidy scheme today

Revenue has assured employers that they will not be deemed insolvent if they avail of the government’s Covid-19 wage subsidy scheme. 

Concerns had emerged that an unpaid wages declaration would effectively be an admission that employers were trading while insolvent.

The key criterion is an employer’s declaration that disruption brought about by the pandemic has resulted in sales being cut by 25%.

The Chairman of the Revenue Commissioners Niall Cody said that he does not believe it will be a challenge for employers to prove that their income has been reduced by more than 25% during this crisis.

Chartered Accountants Ireland has recommended that employers keep any supporting records to demonstrate the negative impact so they can clarify issues with Revenue, should they arise.

The Revenue Chairman has also urged employers to be careful when filling out applications for the Government’s Covid-19 wage subsidy scheme. 

Niall Cody said there are 26,000 employers in the scheme already but there is still a small number, in the hundreds, that entered incorrect bank details. 

Mr Cody said this means Revenue is “sitting on money” that it wants to pay out to companies. 

He told Morning Ireland that €8m was paid to the scheme yesterday and €9m will be paid today.

He added that he believes that number will continue to rise. 

Niall Cody said employers should not worry about being published on the list of companies who applied for the scheme as it will be “a mark of honour for employers who did the right thing”. 

Mr Cody said Revenue guidelines show that even if a company has cash reserves for debt or future expansions they can still qualify for the scheme. 

The purpose of the scheme, he said, is to support employers and leave them in a position to be a valid business when the recovery comes.

Mr Cody said businesses applying for the scheme will have an ongoing relationship with Revenue and he does not anticipate that many businesses will need to be reviewed at the end of the scheme.

Article Source: Click Here

Banks issue warning about Covid-19 scam attempts

The banking industry here has warned consumers to be on the lookout for an expected rise in online fraud and scam attempts that try to take advantage of the circumstances around the Covid-19 crisis.

The Banking and Payments Federation Ireland (BPFI) FraudSMART campaign says people need to be extra vigilant, take their time to do relevant checks and always report suspicious activity to their bank or local Garda station immediately.

It follows a rise in fraud and scam attempts under the cover of the Covid-19 pandemic in other countries, including the UK.

The warning comes as new figures from the BPFI show that overall card fraud across the banking industry reached €12m in the first half of 2019.

“In the coming weeks and months we believe that there will be significant attempts at fraudulent activity around Covid-19 related scams with the potential for substantial losses as fraudsters seek to capitalise on the heightened anxieties of the public during the current crisis,” said Brian Hayes, chief executive of the BPFI.

“With a range of financial and other Covid-19 supports now available for impacted consumers and business we anticipate that fraudsters will target victims via email, text, phone and social media by posing as genuine organisations including government, banks and health care providers in an attempt to get victims to disclose personal or financial information.”
~
Already there have been cases of fraudsters trying to take advantage of the new Covid-19 Pandemic Unemployment Payment by posing as officials asking for financial details to process this payment.

With many people turning to online shopping due to the restrictions on movement, the risks there have also increased, according to the BPFI.

Around 80% of card fraud involved online shopping with the remainder taking place when using a card in store. 

Many of the examples off the types of fraud attempts circulating online in the UK at the moment are focused on online shopping, including scams where people have ordered protective face masks, hand sanitiser, and other products, which have never arrived. 

One victim reported losing over £15,000 when they purchased face masks that were never delivered. 

Over 200 reports of coronavirus-themed phishing emails have also been reported, including messages purporting to be from a research group that mimic the Centre for Disease Control and Prevention (CDC) and World Health Organisation (WHO)

These attempt to trick people into opening malicious attachments which could lead to fraudsters stealing people’s personal information, email logins and passwords and banking details.

According to the UK’s National Fraud Intelligence Bureau (NFIB) there have been 105 reports of Covid-19 related since 1 February 2020, with total losses reaching nearly £970,000.

The BPFI says people should be beware of emails, online requests, and online advertisements offering Covid-19 related tests and products purporting to be vaccines or cures.

They should also always independently check websites or dial the phone number of the company using their website and beware of unsolicited emails asking for personal details or asking the reader to click on a link. 
~
The advice has been echoed by Bank of Ireland, which said today asked its customers to remain vigilant for online fraud, particularly during the pandemic.

“With large numbers of people working remotely and more people generally conducting their daily business online, fraudsters may use this as an opportunity to pull off successful scams,” it said.

“Bank of Ireland is urging customers to be wary of newly created fake websites, and not to respond to bogus SMS text messages seeking their personal details.”

It said some of the scams currently in circulation include: 
~
* Fraudulent WhatsApp messages offering “banking advice”
* Suspicious social media posts linking back to fake websites
* Requests to dial high costs phone lines operating as advice centres
* Calls from fake medical or charitable organisations asking for urgent money transfers
* Suspicious emails or texts asking for personal details or linking to fake websites

Article Source: Click Here

ECB asks banks to halt dividends over Covid-19 crisis

The European Central Bank has asked euro zone banks to freeze dividend payments “until at least October 2020” to preserve liquidity that can be used to help households and companies through the coronavirus crisis.

The Frankfurt institution also asked banks not to buy back shares, another tool to reward shareholders, at a time when policymakers everywhere are taking unprecedented steps to support the global economy.

“The ECB expects banks’ shareholders to join this collective effort,” it said in a surprise statement. 

The measures would “boost banks’ capacity to absorb losses and support lending to households, small businesses and corporates during the coronavirus pandemic”, it added.  

The ECB’s proposal, which would affect dividends for the financial years 2019 and 2020, echoes that of the Brussels-based European Banking Federation.

The EBF said last week that “listed banks should not accrue dividends or undertake share buybacks so as to maintain maximum capital preservation” during the crisis. 

The ECB’s suggestion is likely to be welcomed by euro zone citizens, many of whom vividly remember the taxpayer bailouts of global banks during the 2008-2009 financial crisis. 

“The coronavirus outbreak is threatening the lives of many people around the globe and is pushing the economies of many countries into recession,” ECB supervisory board chair Andrea Enria said in a separate blog post.

“Unlike in the 2008 financial crisis, banks are not the source of the problem this time. But we need to ensure that they can be part of the solution,” Andrea Enria said. 

He estimated that compliance with the ECB’s proposal would keep an extra €30 billion of capital in the financial system. 

While many euro zone banks may be able to hold off on their 2020 dividend payments, some have already paid out those for 2019 or have committed to doing so. 

The ECB said it was not asking for those payouts to be scrapped, but lenders whose shareholders are set to vote on dividend proposals in upcoming annual meetings “will be expected to amend such proposals in line with the updated recommendation”. 

After initially facing criticism for not taking as much action as other central banks in the coronavirus fightback, the ECB has in recent weeks unleashed a flurry of measures to shore up the 19-nation euro area.

That includes a “big bazooka” scheme to buy an additional €750 billion in government and corporate bonds this year to keep cash flowing through the financial system. 

The ECB has also launched a fresh round of ultra-cheap loans to banks and eased rules on capital buffers to encourage banks to offer loans to households and businesses. 

It further sought to calm markets by promising there would be “no limits” to its commitment to protecting the euro. 

The ECB warned earlier this month that it expected banks “to use the positive effects coming from these measures to support the economy” and not to increase dividends or bonus payouts. 

Authorities in the Nordic countries of Finland, Norway and Sweden have likewise been urging banks to forgo paying out dividends. 

Thousands of companies worldwide have been forced to close their doors to slow the spread of the virus, while large swathes of employees have seen their working hours cut or are facing unemployment.

Several major firms have already said they would scrap their 2019 dividends, among them German airline giant Lufthansa and European plane maker Airbus. 

Article Source: Click Here