I’VE OFTEN referred, half in jest, whole in earnest, to the likelihood that the blame game would get underway and that everyone would start suing everyone else until eventually, the Irish State would have to accept responsibility for the bank crash. And, it looks as if that might happen if the Irish Property Council (IPC) gets its way, as last week it announced its intention to take the Irish State to court.

The IPC is an organisation, which represents a broad range of people in the property business, including builders, developers and investors. (And, before you go into hysterics; this organisation represents everyone from the small guy with one little investment property, to the much-hated big-time developers who once owned vast property portfolios.)

The IPC’s main bone of contention is that borrowers are the only ones being held responsible for the Irish property crash. Bankers, the financial regulator and the government appear to have got away scot-free, despite the fact that they were “the creators of the collapse”. Many of them have admitted this and some have even apologised for it but none has suffered because of it.

The IPC is in no way trying to exonerate borrowers from their share of responsibility for the property bubble but it emphasises the word “share” and its members believe that it is grossly unfair that so far, neither the banks nor the government have accepted any “share” of blame, whatsoever.

Indeed, the council clearly states that it considers that the borrowers should be at the top of the list of those responsible. However, it proposes that a court case is required “to identify to what extent the banks are responsible through their reckless lending and the (Irish) State is responsible through their lack of regulation and (their) incompetence”.

Now, before the “anti-property-investor-brigade” amongst you go into a complete spin about how property people deserve to be hammered and you remind us for the umpteenth time how well the same people did during the boom, let me remind you that the vast majority of the people the IPC represents are very ordinary individuals, who were enthusiastically encouraged to invest in property by both the banks and the Irish State.

Also, you might just consider for a moment that although you may not have invested in property over the last decade or so, many of your family, friends and acquaintances did.

Why, one might wonder, did so many Irish citizens suddenly become such enthusiastic property investors? If you believe that the answer to that question is that the nation became greedy, avaricious and materialistic, you might well be correct. But, how did that suddenly happen? What brought on the sudden rush of greed?

It happened because it was allowed to happen. Banks happily lent to all those who wished to borrow and the Irish State condoned all this borrowing, indeed it actively supported and encouraged it.

Is it not the responsibility of the State to protect its citizens from others and indeed, on occasion, from themselves? Is the State not expected to act with due care and diligence?

Take the example of parents (the Irish State), who had shares in a fast-food business (stamp duty) and permitted their child to eat a lot of junk food, indeed, facilitated its consumption by providing little else for the child to eat and compounded it by giving bad example, regularly indulging in fast food themselves.

Imagine if the parents were fully aware of the fact that this unhealthy food was also readily available in their child’s school canteen (the banks) and they never bothered to check with the school principal (the Financial Regulator) to make sure that their child wasn’t eating too much processed, pre-packed rubbish.

Then picture the situation where the children become so obese they all become ill, attendance levels drop and school fees increase. The fast food company no longer sells as much junk food and in turn, the parents’ shares in the company become almost worthless. In addition to subsidising the school fees, the parents must also pay for school games instructors and nutritional therapists.

So, the parents decide that the quickest and cheapest way to get their child back to “normal” weight is to starve it, despite being fully cognisant that their unfortunate offspring may not actually survive such extreme deprivation.

A ridiculous analogy perhaps, but in effect, this is what happened. The Irish State behaved like an irresponsible parent to its children, the Irish citizens. Having fed them nothing but junk food for years, they are now starving them to death.

And now the Irish Property Council is looking for a perfect example of a starving child (a plaintiff); “someone who has lost everything through participation in the property market, either through construction, development or investment” in order to take a class action in the High Court against the Government, the Financial Regulator and the banks over their roles in the collapse of the property market. I doubt they’ll have a problem finding one in the long lines of starving children which make up the country’s dole queues.

ISABEL MORTON – Irish Times

Ireland Property – Daft Property – http://daftproperty.blogspot.com

The ordinary citizens of this State would be well entitled to ask if there is some point in the near future when we will stop being burnt by the great ongoing bonfire of the vanities of our former Celtic Tiger masters.

They would be right, for such now is our ‘state of chassis’ that the Moriarty Tribunal ceased to be the central issue of public discourse after little more than two days. But when it comes to issues of survival, ethics will always come second to economics.

Yet ethics is not unimportant either, for the issues Justice Moriarty dealt with cut to the heart of the colossal political failure of the first Irish Republic. Once again, another tribunal has revealed that we as a State are utterly incapable of governing or policing ourselves.

And unfortunately this failure even extends to a tribunal which after 14 years of investigation has only provided us with the prologue to the resolution of the controversy about the mobile phone licence.

The outside world, on whose charity we are now shamefully dependent, could not be blamed for looking with utter contempt at our feckless ability to get ourselves into the most squalid of messes and our equally consistent inability to resolve it. And when it comes to the failed social experiment of Irish Home Rule, they could hardly be criticised either for wondering if it is right or wise to continue to subsidise a polity which is so politically, morally, and fiscally incontinent.

The consequences of the latter trait were cruelly evident last week, for the vast carelessness of the recent FF/PD coalitions means that Ireland is part of a little herd of states lingering on the window ledge of the EU. This is not good news, for in the chilling words of one EU diplomat, when it comes to the bond market “Ireland, Greece and Portugal are on their own”.

Last week, one of our many masters, Jean-Claude Trichet, almost sounded like President Barack Obama as he claimed that when it came to solving our fiscal and banking crisis “Ireland can do it”. But the mailed fist that was lurking behind the velvet rhetoric swiftly followed as Mr Trichet claimed “Ireland will do it”. In truth the sentiments of Mr Trichet suggested Ireland does not have much of a choice, but the increasing interest rate for Irish long-term bonds suggests the market certainly doesn’t think we will.

As we tip ever closer towards the great unknown of a sovereign default, it is now evident that the ongoing crisis in our banks is a dead hand which stymies and enervates any sense of purpose or confidence within the country. Ireland is now in the worst place it has been since Independence. On one side the cheerleaders of austerity can only promise us blood, sweat, tears and ultimate defeat. Meanwhile, those academics who urge us to default are like the man sending a canary into a smoking coalmine, for unilateral default is the child of the sort of soft thinking that has got us to where we are today. Ireland is not Russia . . . or even Argentina.

Before we start shaking our fists at Germany or shouting that Europe must help us, we should realise it would of course be better if Europe was to help us — but they do not have to do so. And they will only give us a hand up if we begin to help ourselves.

In that regard one modest proposal might consist of the immediate abolition of privilege days where the civil servants of a Republic continue to celebrate the birthday of the King of England.

Report – Sunday Independent

Ireland Property – Daft Property – http://daftproperty.blogspot.com

Brace yourself…€200m cuts and tax rises on way.

IRISH taxpayers are being warned to brace themselves for further hardship with over €200m in increased charges and spending cuts on the way.

Finance Minister Michael Noonan said his ‘mini-Budget’ would include more cuts and tax hikes.

While the Programme for Government contains a pledge not to increase income tax, there are many other indirect taxes which could be increased instead.

These include charges for State services — for example A&E charges.

The Government has promised a ‘Jobs Budget’ within the next three months which will cost €220m to implement.

But it has to raise this money in other ways to ensure that the funding from the EU-IMF bailout deal continues to flow.

Wage

In the Dail yesterday, Mr Noonan confirmed that the Government would need money to pay for measures such as reversing the cut in the minimum wage, halving the lower rate of employers’ PRSI and reducing the lower rate of VAT from 13.5pc to 12pc.

“These costs will have to be counterbalanced by offsetting measures to reduce expenditure or raise revenue,” he said.

It means that the Government is facing the prospect of having to raise €220m through either tax increases or spending cuts, which will be implemented by bringing in another Finance Bill.

Mr Noonan said he would be examining the options available to him over the coming weeks — and did not provide any further details.

Summit

He was quizzed about the impact of the measures by Sinn Fein finance spokes-man Pearse Doherty, who said that they would cost up to €779m in a full year. But Mr Noonan said the actual cost would be €220m this year and €640m in a full year.

Mr Noonan again stated that there would be no compromise on the 12.5pc corporation tax rate when Mr Kenny met other EU leaders at today’s crucial bailout summit.

He said that around 14pc of tax revenues will be required to service the interest on the State’s national debt this year, rising to 18pc by 2014.

“While this is undoubtedly significant and high, the level of tax revenue devoted to servicing the debt in the 1980s was higher,” he said.

Report by Claire Murphy – Evening Herald

Ireland Property – Daft Property – http://daftproperty.blogspot.com

Brace yourself…€200m cuts and tax rises on way.

IRISH taxpayers are being warned to brace themselves for further hardship with over €200m in increased charges and spending cuts on the way.

Finance Minister Michael Noonan said his ‘mini-Budget’ would include more cuts and tax hikes.

While the Programme for Government contains a pledge not to increase income tax, there are many other indirect taxes which could be increased instead.

These include charges for State services — for example A&E charges.

The Government has promised a ‘Jobs Budget’ within the next three months which will cost €220m to implement.

But it has to raise this money in other ways to ensure that the funding from the EU-IMF bailout deal continues to flow.

Wage

In the Dail yesterday, Mr Noonan confirmed that the Government would need money to pay for measures such as reversing the cut in the minimum wage, halving the lower rate of employers’ PRSI and reducing the lower rate of VAT from 13.5pc to 12pc.

“These costs will have to be counterbalanced by offsetting measures to reduce expenditure or raise revenue,” he said.

It means that the Government is facing the prospect of having to raise €220m through either tax increases or spending cuts, which will be implemented by bringing in another Finance Bill.

Mr Noonan said he would be examining the options available to him over the coming weeks — and did not provide any further details.

Summit

He was quizzed about the impact of the measures by Sinn Fein finance spokes-man Pearse Doherty, who said that they would cost up to €779m in a full year. But Mr Noonan said the actual cost would be €220m this year and €640m in a full year.

Mr Noonan again stated that there would be no compromise on the 12.5pc corporation tax rate when Mr Kenny met other EU leaders at today’s crucial bailout summit.

He said that around 14pc of tax revenues will be required to service the interest on the State’s national debt this year, rising to 18pc by 2014.

“While this is undoubtedly significant and high, the level of tax revenue devoted to servicing the debt in the 1980s was higher,” he said.

Report by Claire Murphy – Evening Herald

Ireland Property – Daft Property – http://daftproperty.blogspot.com

Property Council to sue State, banks over collapse:

AN ORGANISATION representing property investors and developers is to take a class action in the High Court against the Government, the Financial Regulator and the banks over their roles in the collapse of the property market.

The Irish Property Council (IPC) is to outline its plans today for the court proceedings which will set out to apportion responsibility for the collapse.

It says the ruination of the property market has been caused “by the reckless lending of our banks, lack of regulation by our Government and the disregard of prudent advice on fiscal policy by the Government in power”.

The council is to invite developers, house purchasers or investors who are now “total casualties of the collapse” to put forward their names for the court action and a claim for compensation.

The IPC was set up last year to provide support for small builders, developers and investors who have run into financial difficulties following the bursting of the property bubble.

“Property owners are being ruthlessly scapegoated by Government and the banks through the court without any responsibility in this catastrophe.

“The IPC requires a willing plaintiff that can be supported in a court action. We are not looking to get the borrower off.

“We are simply seeking fairness in how that responsibility is shared and a recognition that responsibility exists within the Irish State.”

The IPC’s legal adviser, Paddy Fitzgerald of Ferry solicitors, said the reality was that the IPC would have to succeed.

“We can’t continue in this vein because “everyone involved in commercial property and experiencing negative equity will have a judgment and there will be nobody left to continue the business.”

About 10 per cent of the country’s 790,000 mortgage holders are either more than 90 days in arrears or have negotiated revised payment terms with their banks.

Many of the additional 100,000 residential investors have also fallen behind with their repayments and are facing an increase in mortgage interest charges in the near future.

Others are also threatened with the ending of interest-only repayments arrangements with their banks.

Report by JACK FAGAN – Irish Times

Ireland Property – Daft Property – http://daftproperty.blogspot.com

Property Council to sue State, banks over collapse:

AN ORGANISATION representing property investors and developers is to take a class action in the High Court against the Government, the Financial Regulator and the banks over their roles in the collapse of the property market.

The Irish Property Council (IPC) is to outline its plans today for the court proceedings which will set out to apportion responsibility for the collapse.

It says the ruination of the property market has been caused “by the reckless lending of our banks, lack of regulation by our Government and the disregard of prudent advice on fiscal policy by the Government in power”.

The council is to invite developers, house purchasers or investors who are now “total casualties of the collapse” to put forward their names for the court action and a claim for compensation.

The IPC was set up last year to provide support for small builders, developers and investors who have run into financial difficulties following the bursting of the property bubble.

“Property owners are being ruthlessly scapegoated by Government and the banks through the court without any responsibility in this catastrophe.

“The IPC requires a willing plaintiff that can be supported in a court action. We are not looking to get the borrower off.

“We are simply seeking fairness in how that responsibility is shared and a recognition that responsibility exists within the Irish State.”

The IPC’s legal adviser, Paddy Fitzgerald of Ferry solicitors, said the reality was that the IPC would have to succeed.

“We can’t continue in this vein because “everyone involved in commercial property and experiencing negative equity will have a judgment and there will be nobody left to continue the business.”

About 10 per cent of the country’s 790,000 mortgage holders are either more than 90 days in arrears or have negotiated revised payment terms with their banks.

Many of the additional 100,000 residential investors have also fallen behind with their repayments and are facing an increase in mortgage interest charges in the near future.

Others are also threatened with the ending of interest-only repayments arrangements with their banks.

Report by JACK FAGAN – Irish Times

Ireland Property – Daft Property – http://daftproperty.blogspot.com

Tiny green shoots of property recovery brutally crushed by our Central Bank…

Our leaders are facing the mother and father of all political and diplomatic battles in Brussels.

‘I’M not happy with the idea that some governments obviously find some pleasure in torturing Ireland in the meetings and outside. I don’t like this way of dealing with serious problems.”

These words are not those of Michael Noonan but of Luxembourg Prime Minister Jean-Claude Juncker, chairman of the euro group of finance ministers. Juncker criticised the link between a lower interest rate on bailout loans and pressure to increase corporate tax.

Again, they are words that could have been written by Noonan — and my guess is that they were, in fact, inspired by Limerick’s master of the soundbite.

Only a few months ago, Noonan was bitterly critical of the Government for its failure to nourish our diplomatic relations with small EU countries such as Luxembourg, Denmark, the Netherlands, and Belgium — our allies from the early EEC days in the 1970s.

My hunch is that Noonan lost no time in restoring some of those neglected alliances, and his tactics are already paying off.

The hubris of the Celtic Tiger years seduced us into losing the run of things and we liked to think of ourselves as anybody’s equal, including Germany’s. We hung on to Germany’s coat-tails in the delusional belief that we were heavy-hitters.

Now our people are being crucified on the altar of German monetarist dogma which, it seems, we daren’t challenge.

Why is it unthinkable that we should even contemplate the idea of leaving the euro or, heresy of heresies, quit the EU altogether?

I’m not proposing that we take such action, but why are we not even allowed to express the thought?

Such suffocating dogmatism is redolent of the time when the church was at the height of its power and when to challenge its teaching, however tentatively, was to risk banishment into the dark void.

The EU has grown into one of the most powerful empires in history and its dogma is intended to protect power and money, the fundamental pillars of imperial-ism. Its grip, however, does not rely on armies, navies and air forces but on something more insidious: the perpetuation of the biggest bureaucratic gravy train in history, which has at its heart a Faustian Franco-German pact.

Recently, a senior eurocrat remarked: “France needs Germany to disguise its weakness, and Germany needs France to disguise its strength.”

If I might put it less elegantly, Nicolas Sarkozy is ‘on the take’ from Angela Merkel, and she uses him to hide the fact of Germany’s ruthless economic hegemony, a feat that requires at least one major collaborator, and who better for this role than France?

By now, it would require a leader of the iron willpower and fanaticism of Charles Stewart Parnell to rescue us from our desperate status as a puppet state of the Frankfurt-Brussels axis.

We need greatness as we have rarely needed it before, even in the darkest times in our history.

But superficially, at least, there appears to be hope in the air lately with the change in government and the arrival of spring. One otherwise sensible person told me last week that he thought the recession was coming to an end.

“Most people had a good time on St Patrick’s Day, we have a new Taoiseach, most people like him, including President Obama, we had a great Cheltenham, and both the queen and Obama are coming. It will be a wonderful boost for tourism. Something good is definitely happening. Feelgood is a real thing, maybe people will spend more money,” he said.

Only a sadist — or the Central Bank — would destroy his illusions, particularly last Friday as thousands took ‘bridge day’ leave between the bank holiday and the weekend to enjoy the sunshine.

Only 48 hours previously the Central Bank had issued a self-fulfilling prophecy of a further collapse in property prices as well as forecasting negative economic growth.

The tiniest green shoots of a property recovery were brutally crushed instantly, for who in their right mind would buy anything against such a forecast of doom?

Over the past few years I’ve become a convinced conspiracy theorist, in that I detect the hidden hand of the European Central Bank in most of our economic policy decisions. I believe that Frankfurt-Brussels wants to keep consumer demand depressed in this country, to keep property values falling, and to allow businesses to close and jobs to be lost in pursuit of the Holy Grail of cost competitiveness and export-led recovery.

The fact that people’s lives are blighted and sometimes ruined is neither here nor there as far as they are concerned. Every war causes collateral damage.

To the unblinking Teutonic eye we have made a dog’s dinner of managing our own affairs, and if we are to be bailed out it will be on their terms.

We still don’t know the full story of the notorious bank guarantee of September 28, 2008, brought in after the ECB had given vast loans to Irish banks stricken by the flight of deposits, and at a time Frankfurt wanted Irish taxpayers to guarantee its exposure.

There is a huge amount of blame for our debt mountain that we cannot but lay on our own shoulders, such as our chronic failure to control public spending culminating in the surreal Croke Park agreement.

But the mammoth debts our taxpayers have taken on to save the banks are not of our doing, but instead can be blamed on the ECB and its efforts to protect itself and its masters from the consequences of reckless lending by European banks to this country during the boom.

We are now facing the mother and father of political and diplomatic battles for economic survival.

Already, appeasement is in the air in some quarters.

The Irish Times, in a defeatist leading article last Monday, warned: “Mr Kenny has a very weak hand. His trump veto is simply unplayable”‘

Parnell and his party went into the House of Commons — the heart of the British Empire — and filibustered their way, against powerful intimidation, into a position of critical influence.

We need such independence of thought and spirit, and such steely determination, every bit as much today as we did in 1875.

Report by Aengus Fanning – Sunday Independent

Ireland Property – Daft Property – http://daftproperty.blogspot.com

British housing associations may buy ghost estates…

HOUSING ASSOCIATIONS in Britain are considering buying ghost estates in Ireland after meeting former minister for housing Michael Finneran last month before he left office.

Mr Finneran travelled to Britain with representatives of the Housing and Sustainable Communities Agency in a bid to get them involved in his social housing leasing initiative.

The initiative was introduced by Mr Finneran in 2009 as a solution to the lack of funds available to local authorities to build social housing. But take-up by Irish organisations has been slow.

Under the scheme, British associations would buy ghost estates in Ireland from developers or from Nama and they would rent the properties out to provide social housing in Ireland for the estimated 130,000 households on waiting lists.

In return, local authorities would pay the associations 92 per cent of market rent for the property and they would also receive a rent from the tenant.

Historically, local authorities received a 100 per cent capital grant from the Department of the Environment to build social housing.

In a statement, the Housing and Sustainable Communities Agency said Ireland did not have the capital funding to provide social housing.

“We now need to encourage investment in the provision of social housing,” a spokeswoman said.

British housing associations would have the scope to raise finance and Ireland could offer them an opportunity to expand their stock.

She also said one major housing association in Britain was considering investing in Ireland. “Their intention would be to partner with an Irish housing association who would manage the housing,” she said.

There were also inquiries from investors in Britain and elsewhere.

Among the companies that met Mr Finneran was Places for People, one of the largest property management, development and regeneration businesses in Britain. It confirmed it had been in discussions as part of investigations into “new business opportunities and markets”, but said it did not wish to comment further.

John Rogers, head of property with Irish housing charity Respond!, said they had been striving to engage with Mr Finneran since he announced the leasing initiative in 2009.

A report prepared for the outgoing government found that almost 350 unfinished estates were in need of urgent work to ensure the safety of residents and the public. Some 52 of these estates were in the Cork County Council area, 34 were in Cavan and 23 in Donegal.

Report by FIONA GARTLAND – Irish Times

Ireland Property – Daft Property – http://daftproperty.blogspot.com

House prices could fall 13.4% this year in bank test scenario…

HOUSE PRICES could fall by a further 13.4 per cent this year and 14.4 per cent next year before recovering in 2013 under a scenario considered by the Central Bank to stress test the banks.

This would represent a 55 per cent decline in house prices from the peak of the market in 2007.

But under a worst-case scenario, house prices may fall by 17.4 per cent this year and 18.8 per cent next year, which would be a decline of 60 per cent from the peak.

The Central Bank, which published details of the scenarios yesterday, is testing the lenders to see how much of the €35 billion set aside in the EU-IMF bailout fund for the banks will be needed.

Minister for Finance Michael Noonan acknowledged yesterday that more than €10 billion may be required, but said he had “no idea at this stage” how much more was needed.

He was speaking after he and Minister for Public Expenditure and Reform Brendan Howlin met senior officials from the IMF and the EU to discuss the new Coalition’s programme for government.

The bank tests are being applied to AIB, Bank of Ireland, Irish Life and Permanent and the EBS and the results will be published on March 31st. The Central Bank is not testing Anglo Irish Bank and Irish Nationwide Building Society as they are being closed down over time.

The tests are aimed at determining the scale of further losses at the bank and whether they have sufficient cash to cover the losses and remain above a higher minimum level set by the Central Bank.

The next €10 billion to be pumped into the banks will bring the total cost of bailing them out to €56 billion, though this is likely to increase further as a result of the stress tests.

Mr Noonan and Mr Howlin said the IMF and EU officials did not raise any objection to the programme for government, even though it contains proposals that run counter to the conditions in the €85 billion rescue package agreed with the previous Fianna Fáil-led government.

The two Ministers met the mission chiefs from the three international bodies concerned: European deputy director of the IMF Ajai Chopra, ECB chief economist Jurgen Stark, and Istvan Szekely, a senior official with the EU Commission.

Mr Noonan said the “troika” of bodies had agreed in principle that the conditions laid down in the memorandum of understanding agreed last November could be changed to accommodate the new programme for government as long as the overall targets remained unchanged.

A separate European battle came to a head yesterday as the Commission pushed ahead with the publication of long-delayed legislation to establish a common consolidated corporate tax base, an initiative seen by Taoiseach Enda Kenny the “back door” to tax harmonisation.

Dublin fears the plan would dim the lustre of Ireland’s heavily contested tax regime by lessening scope for large multinational companies to maximise the profit they record in Ireland.

But taxation commissioner Algirdas Šemeta made light of criticism from Ireland, saying much of it was based on false assumptions about the initiative. “I don’t understand why some of us are so worried about it,” he told reporters.

Publication of the draft law comes as Mr Kenny faces intensive pressure from France and Germany to make a “gesture” on corporate taxation as a condition for a lower interest rate on Ireland’s bailout loans.

In Brussels last night, Minister of State for Europe Lucinda Creighton expressed cautious optimism about the prospects for a resolution.

“There’s scope for manoeuvre and dialogue with the Germans in the next few days. I think it has to be clarified that one country is not the European Union,” she said.

“The French have always had a problem with corporation tax, have always been on this agenda. Mr Sarkozy is now making a major issue of it, probably for domestic reasons.”

Report by SIMON CARSWELL, HARRY McGEE and ARTHUR BEESLEY – Irish Times

Ireland Property – Daft Property – http://daftproperty.blogspot.com

Growing dole queues expose fragility of Irish economy…

Unemployment figures show Ireland cannot afford to lose a single multinational – but this is not stopping France and Germany trying to force it to raise corporation tax:

Sometimes you have to wonder if the rest of Europe understands the fragility of Ireland’s economy.

Do the Germans and French not understand that there is a prospect of zero growth in the economy in the next three years and that forcing multinationals out of the country could finish Ireland off altogether?

Their constant attacks on Ireland’s low corporation tax rate have even got on the nerves of Ryanair’s Michael O’Leary, who has warned that any increase will jeopardise the country’s ability to pay off its debts.

Figures out on Tuesday showed a surprise rise in unemployment. Yet Ireland swiftly came under attack again for its low corporation tax of 12.5%, as if this was any part of a fix for the challenging times ahead.

German finance minister Wolfgang Schäuble said US treasury secretary Timothy Geithner had complained that too many American companies were investing in Ireland for tax purposes.

According to Arthur Beesley, the Irish Times’s Europe correspondent, Schäuble did not elaborate, but told reporters at an EU finance ministers’ meeting that Ireland’s 12.5% corporate tax rate “can’t stay like this”.

Solidarity was not a one-way street, he added. Referring to corporation tax, he said “if Ireland wants something additional from us, then we can raise that issue”.

But what he didn’t say was that Americans express gripes about Ireland’s tax regime for other reasons – their own regime is one of the most uncompetitive in the world.

This week the Tax Foundation found that America was soon going to have the highest corporation tax in the world, overtaking Japan with a headline rate of almost 40%.

But that too is irrelevant. Ireland is now, says one tax accountant familiar with multi-national tax structures, the “Delaware of Europe” because it enables companies to shuffle profits around a network of subsidiaries and reduce tax obligations as a result.

Ireland desperately needs the multinationals

…Multinationals don’t pay anything like 12.5% tax. Google, one of Ireland’s biggest employers, pays less than 3%.

Google has in effect reduced its corporate tax bill to 2.4%, saving .1bn (£2bn) in the past three years. It would have paid 35% in the US. The process is entirely legal and Google is far from alone in exploiting it: more than 400 multinationals are now established in Ireland.

But to lose any of them now would be a hammer blow to the Irish economy. They are responsible for about one third of the country’s corporate tax take and responsible for employing around 100,000 locals.

And Ireland desperately needs these jobs.

Any hope that the economy had stopped deteriorating was dashed on Tuesday with new figures showing unemployment in Ireland at 14.7% – the highest rate in 17 years.

The Quarterly National Household Survey figures are a dreadful reminder of the challenging times Ireland lives in – nobody expected the unemployment figures to rise beyond the 13.5% at the end of last year. If anything, the figures were expected to fall, taking into account emigration of about 1,000 people a week.

Young people are being hit hardest. The number of teenagers between 15 and 19 in work has fallen by almost 60% year-on-year while the number of employed in the 20- to 24-year-old age bracket fell by almost half.

The picture is worst for the long-term unemployed. For the first time, the number of those unemployed for more than a year was higher than the number of people who were out of work for less than a year.

Separate figures released by the Organisation for Economic Co-operation and Development (OECD) showed that unemployment rate in Ireland is now the second highest in Europe, after Spain and ahead of Slovakia, Estonia and Greece. The UK incidentally is 12th, between Sweden and Denmark.

On Tuesday night former head of the National Treasury Management Agency, Michael Somers, painted a bleak picture of Ireland’s future. “The awful thing is there are figures out there that show no growth for the next three years … the problem is what happens after that.” Given the tax rises and pay cuts in last year’s budget, “you wonder how are we going to get out of this mess … we are in a downward spiral,” he told RTE.

The next two weeks will be critical for Ireland as Europe edges closer to finalising its plan for an expanded bailout fund.

For Enda Kenny, the bleaker the picture Somers paints of Ireland the better, as it all chimes with Fine Gael’s new mantra that the bailout as currently configured is “unsustainable”.

In other words, the closer we get to default, the stronger the chance of a renegotiation.

The IMF’s Ajai Chopra, who has returned to Dublin, will certainly get a flavour of the challenges ahead today when he is briefed on the bank stress tests. These are expected to show a further black hole in AIB.

Back in Europe, Ireland got some much-needed support on Tuesday from Luxembourg’s prime minister, Jean-Claude Juncker, who said he did not think a link should be made between the corporate tax rate and more lenient bailout terms.

“As the prime minister of Luxembourg, I don’t like this link between the corporation tax issue and the so-called Irish package,” he told the Irish Independent after a meeting in Brussels.

In a swipe at France and Germany he added: “Some governments obviously find some pleasure in torturing Ireland inside and outside [EU] meetings.

Any premier of Luxembourg, which operates on the most tax-friendly regimes in Europe, would say that. But right now Ireland will take comfort from wherever it can.

Report by Lisa O’Corroll – The UK Guardian Newspaper.

Ireland Property – Daft Property – http://daftproperty.blogspot.com