Garret Fitzgerald : Enquiry needed into how economy lost competitiveness
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canicemcavoy
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While he's right about many things, not least Quinn's period as Minister for Finance, that statement from Garret is ludicrous. The fact that the bursting of the dot.com bubble at the turn of the century had no impact on Irish property prices (when, for example, they plummeted in San Francisco) should have set off alarm bells. If Garret believes this, then he must also believe we had a bubble which only lasted 3 years.
C
Capt. Beaky
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If all the AIB's punters behaved like the eminent doctor it would long be passe. This guy does not deserve to be taken seriously. He has got things wrong too many times. His bumbling professor routine no longer cuts it. Nothing new in his latest offering.Goodnight Garrett.
People on this thread should try playing the ball instead of the man . We have lost competitiveness and its the fault of FFs 10 year mismanagement of our once in a lifetime opportunity. People are emgrating once again because there are no jobs at home for them. It's a disgrace.
I agree. Garret made a balls of it when he was in charge but that doesn't mean his opinion is worth nothing now or that he can't point out where the mistakes were made.
One of the reasons we are uncompetitive is the massively high legal and accounting fees in Ireland, as well as massive commercial rents.
Here is a case of an examiner asking for 425 per hour to deal with the examinership of a firm. Sensibly, the Judge questioned this rate.
[broken link removed]
The 425 ph equates to 884,000 a year!!
"The judge also questioned the €50,000 legal bill sought for lawyers who represented the examiner during the three days the matter was before the court."
50k for 3 days in court!!!!
These rates need to fall to maybe 100 per hour.
Forget about the min wage, the problems are in rents and prof fees!!!!
Here is a case of an examiner asking for 425 per hour to deal with the examinership of a firm. Sensibly, the Judge questioned this rate.
[broken link removed]
The 425 ph equates to 884,000 a year!!
"The judge also questioned the €50,000 legal bill sought for lawyers who represented the examiner during the three days the matter was before the court."
50k for 3 days in court!!!!
These rates need to fall to maybe 100 per hour.
Forget about the min wage, the problems are in rents and prof fees!!!!
Another example of uncompetitiveness, caused by massive rents:
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"The restaurant is in a building on the corner of Dawson Street and Duke Street that formerly housed the Graham O’Sullivan restaurant, and which was purchased in November 2006 for approximately €17 million."
This crazy price means the rents are huge.
Rent = 680k pa = 56,667pm = 13,000 per week.
How can you run a business with that sort of overhead??? No wonder meals out are so expensive in Ireland.
These rents need to fall by 50%+.
[broken link removed]
"The restaurant is in a building on the corner of Dawson Street and Duke Street that formerly housed the Graham O’Sullivan restaurant, and which was purchased in November 2006 for approximately €17 million."
This crazy price means the rents are huge.
Rent = 680k pa = 56,667pm = 13,000 per week.
How can you run a business with that sort of overhead??? No wonder meals out are so expensive in Ireland.
These rents need to fall by 50%+.
More of the same: retail shops closing due to huge rents:
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"Starbucks wants out of “affluent” Dalkey immediately where it rents the former Dalkey Dispensary on Castle Street for €110,000 a year. It is equally anxious to assign its lease of a two-storey modern coffee shop at The Triangle in Ranelagh where it is paying an even higher rent, €131,622, a year."
These don't seem too bad, 2k-2.5k pw in places where I assume a lot of coffee is drunk???
"Starbucks has also had second thoughts about its branch in Tallaght where it is leasing a ground floor retail unit of 257sq m (2,772sq ft) in Tallaght Cross East at an annual rent of €155,000 or 10 per cent of gross turnover, whichever is greater. The rent is one of the few bright spots in the troubled property portfolio owned by Liam Carroll."
3k pw rent in Tallaght, selling coffees, hmmmmm?????
"On top of the rent, Starbucks also pays rates: €15,300 in Dalkey; €11,259 in Ranelagh; and (wait for it) €23,905 in Tallaght."
Costs are also too high in the local authorities.
[broken link removed]
"Starbucks wants out of “affluent” Dalkey immediately where it rents the former Dalkey Dispensary on Castle Street for €110,000 a year. It is equally anxious to assign its lease of a two-storey modern coffee shop at The Triangle in Ranelagh where it is paying an even higher rent, €131,622, a year."
These don't seem too bad, 2k-2.5k pw in places where I assume a lot of coffee is drunk???
"Starbucks has also had second thoughts about its branch in Tallaght where it is leasing a ground floor retail unit of 257sq m (2,772sq ft) in Tallaght Cross East at an annual rent of €155,000 or 10 per cent of gross turnover, whichever is greater. The rent is one of the few bright spots in the troubled property portfolio owned by Liam Carroll."
3k pw rent in Tallaght, selling coffees, hmmmmm?????
"On top of the rent, Starbucks also pays rates: €15,300 in Dalkey; €11,259 in Ranelagh; and (wait for it) €23,905 in Tallaght."
Costs are also too high in the local authorities.
Here we go again:
"Retailers say rents will lead to closures"
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There is no need to cut wages in Irl, what needs to fall are rents.
"Mr Corcoran has been a vocal critic of what he says is an intransigent attitude on the part of landlords. “We open everyday to lose €1,000 a day there,” he said of his 900sq ft Grafton Street store, where the rent quadrupled from €100,000 in 1995 to €445,000 in 2005."
In 10 yrs the rent cost quadrupled.......
Will we ever learn that low rents and property costs are good for us?
"Retailers say rents will lead to closures"
[broken link removed]
There is no need to cut wages in Irl, what needs to fall are rents.
"Mr Corcoran has been a vocal critic of what he says is an intransigent attitude on the part of landlords. “We open everyday to lose €1,000 a day there,” he said of his 900sq ft Grafton Street store, where the rent quadrupled from €100,000 in 1995 to €445,000 in 2005."
In 10 yrs the rent cost quadrupled.......
Will we ever learn that low rents and property costs are good for us?
+1, though my only problem is the old cliché of "chicken and egg". Was it rents alone that drove everything else up?
I agree with Fitzgerald's analysis but disagree with his conclusion. We'll never find the first mover for this situation and I'm not sure what new light can be shed that will help anyone trying to survive in business at the present time.
It's a combination of everything rents, house prices, wages, cost of living, etc. I don't think it right to pick one and apportion blame on one group. It was a rickety premise to build an economy on. Not one of us refused a pay rise on the basis that it was an unsustainable economic principle.
There was no safety net, there was no look to how to control the increasing operating costs. Sure it'll never happen, sure it'll be grand.
It did and it isn't.
Now business is left in limbo. They can't sell domestically because there's less money around and margins are so low they can't reduce prices much further. But price reduction hasn't been seen elsewhere in council rates (in most cases), energy costs, rents, etc. So the only thing employers can look at is payroll costs, that's the only thing the can actually negotiate on. But there's a limit to how low we can go with wages, in many cases we're probably at that bottom already.
There's plenty out there that needs to be reduced and immediately in order to help business compete.
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Capt. Beaky
Guest
Starbucks pulled out of Ranelagh about six months ago. There is a God
What he said.
S
sunrock
Guest
Surely the landlords will have to accept lower rents, if the buisnesses just can`t afford them?A lower rent is better than no rent.The customer of a coffee shop will only pay so much for a cup of coffee,wages are set by a legal minimum wage, so it seems clear that rents will have to go down or the buisness folds in that location.
Who are these landlords anyway that are raking in this huge money?I suppose they are the property owners who can`t afford their mortgages now that rents are going down.
The credibility of Garret became suspect when he rowed in robustly behind NAMA.One had to wonder if he had a vested interest...maybe he owned bank shares or dabbled in property.
Who are these landlords anyway that are raking in this huge money?I suppose they are the property owners who can`t afford their mortgages now that rents are going down.
The credibility of Garret became suspect when he rowed in robustly behind NAMA.One had to wonder if he had a vested interest...maybe he owned bank shares or dabbled in property.
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Capt. Beaky
Guest
If he buys into Aer Lingus, Ryan Air or Aer Aran - sell PDQ . He seems to suffer from financial altitude sickness which affects his ability to get back on his feet without help. Probably caused by the rarefied air in which he envelopes himself.
. He seems to suffer from financial altitude sickness which affects his ability to get back on his feet without help. Probably caused by the rarefied air in which he envelopes himself.Garret Fitzgerald makes some good points but there were also global factors at play. He doesn't mention the dot-com boom. That propelled the American economy and by extension the Irish until about 2001 - I think it was March 2001 that Microsoft share price reached its peak. But the dot-com bust didn't feed through into the real economy (jobs) until about 2003, which I think of as a sort of inflection point in the Irish economy.
2003 in my opinion was when house prices stopped being driven by the growth in the rest of the economy and started taking on a life of their own.
In fairness to Charlie McCreevy, he did try to take cash out of the economy with the SSIA scheme but the fact that the euro came in meant that Ireland's inflation rate was now controlled by the rate set in Frankfurt and not in Dublin.
By 2004 Ireland was basically the most expensive country in the eurozone so any inflation after that point was going to be a nail in the competitiveness coffin.
2003 in my opinion was when house prices stopped being driven by the growth in the rest of the economy and started taking on a life of their own.
In fairness to Charlie McCreevy, he did try to take cash out of the economy with the SSIA scheme but the fact that the euro came in meant that Ireland's inflation rate was now controlled by the rate set in Frankfurt and not in Dublin.
By 2004 Ireland was basically the most expensive country in the eurozone so any inflation after that point was going to be a nail in the competitiveness coffin.