Written Answers Nos 71-90
71. Deputy Pearse Doherty asked the Minister for Finance the reason a bank (details supplied) is charging customers a break fee significantly higher than other banks if they decide to move from a fixed rate apparently in contravention of the Mortgage Credit Directive; and if he will make a statement on the matter. [21577/18]
Amharc ar fhreagraI have received the following response from AIB:
" AIB adheres fully to the Mortgage Credit Regulation (MCR) and explicitly in relation to section 26 – Early Repayment. The bank is satisfied any breakage costs charged do not exceed the financial loss incurred. There are a variety of different methodologies being applied within the market to calculate breakage fees, and it is important to state, no standard methodology was prescribed by MCR. AIB Bank breakage costs are calculated as per the below worked example:
(A) the amount of the prepayment or early repayment = € 100,000
(U) is the unexpired term of the fixed interest rate period (in months = 2 years (24 months) on basis a customer fixed for 5 years (60 months) and are now breaking out of fixed rate after 3 years (36 months)
(D%) is the difference between the fixed interest rate applying to the facility and the fixed interest rate which would then apply to the facility for the amount of "A" for the term of "U" = 1% on the basis a Customer fixed at a 5 year rate of 4.25% and the fixed rate for the unexpired period (i.e. 24 months) is 3.25%
So, applying the formula A x U x D: € 100,000 x 24/12 x 1% = € 2,000
Important: where the remaining term of the fixed rate is between fixed rate terms e.g. 18 months, the breakage cost calculates at the current 2 year fixed and at the current 1 year Fixed and quotes the customer whichever is the lowest breakage fee amount.
Details of rates used by AIB to calculate breakages are detailed here: https://aib.ie/our-products/mortgages/mortgage-interest-rates.
AIB does not impose any penalties or other administration fees for operational costs incurred in breaking of a fixed rate mortgage contract over and above the break funding formula and does not make any profit or gain from the application of breakage costs to customers."
72. Deputy Willie Penrose asked the Minister for Finance if approval from the European Commission to levy a lower rate of stamp duty has been obtained (details supplied); the way in which farmers who have recently purchased lands for the purposes of the consolidation will be treated in terms of paying the lower rate of stamp duty; and if he will make a statement on the matter. [21646/18]
Amharc ar fhreagraAs I have outlined in a number of PQ replies recently, the measure legislated for in section 68 of Finance Act 2017 (which was not a Budget measure) will allow a farmer to claim relief from stamp duty where he or she sells and purchases land for the purposes of consolidating an existing farm holding has been introduced, subject to a commencement order after a full consideration of any administrative or EU state-aid requirements.
For the relief to operate, there must be both a sale and a purchase of land within a period of 24 months of each other. Where other qualifying conditions are satisfied, stamp duty will only be paid to the extent that the value of the land that is purchased exceeds the value of the land that is sold. A reduced rate of 1% will be charged on the excess, if any, of the purchase value. If the sale takes place before the purchase, then relief will be given at the time of purchase. However, if the purchase takes place first, then stamp duty will have to be paid but can subsequently be refunded when the sale takes place.
A number of qualifying conditions must be satisfied before the relief can apply. The most important condition is that Teagasc must issue a certificate stating that a sale and purchase or an exchange of farmland was made for farm consolidation purposes. This is the certificate that is currently required in relation to the capital gains tax relief. The criteria to be used by Teagasc for this purpose and the information to be supplied to Teagasc are contained in guidelines published by the Minister for Agriculture, Food and the Marine:(www.agriculture.gov.ie/media/migration/formsdownloads/V12CGTGuidelinesfinal060315.pdf).
A purchaser of farmland must retain ownership of the farmland for a period of five years and must use the land for farming. Where any part of the land is disposed of before the end of this five-year holding period, the stamp duty relieved can subsequently be recovered by Revenue, or partly recovered as appropriate.
The measure will apply to all transactions which took place after 01 January 2018, so farmers who consolidate their holdings prior to the commencement of the relief will still be eligible.
I understand that the Department of Agriculture, Food and the Marine has recently made an application to the European Commission for State Aid approval of the measure and that a response is awaited.
It follows that, at this point, no definitive date for the commencement of the relief can be provided. I would however wish to emphasise that, subject to state aid approval and commencement, any eligible consolidation that takes place on or after 1 January 2018 and on or before 31 December 2020 will benefit from the consolidation measure introduced in section 68 of Finance Act 2017 (No 41 of 2017).
73. Deputy Brendan Smith asked the Minister for Finance if he is satisfied with the level of lending to small and medium enterprises by each of the banks; if his attention has been drawn to the widespread concerns in relation to the difficulties encountered by such enterprises in securing finance; and if he will make a statement on the matter. [21660/18]
Amharc ar fhreagra74. Deputy Brendan Smith asked the Minister for Finance if he is satisfied with the level of lending by each of the banks to the farming sector; if his attention has been drawn to widespread concerns of many farmers in securing funding; and if he will make a statement on the matter. [21661/18]
Amharc ar fhreagraI propose to take Questions Nos. 73 and 74 together.
Supporting the availability of finance for SMEs is a cornerstone element of Government policy in our efforts to strengthen the economy and create jobs.
My Department commissions biannual surveys to ascertain the demand for credit by SMEs. This survey series, most recently conducted by Fitzpatrick Consultants and Behaviour and Attitudes on behalf of my Department, is the most comprehensive survey of SME credit demand in Ireland, covering 1,500 respondents and involving over 6,000 direct telephone calls to SMEs. SMEs of all sizes, trading in all sectors, excluding property development and speculative activities, are included. The survey covers demand for credit from both bank and non-bank sources.
I would draw the Deputy's attention to the most recently published Department of Finance SME Credit Demand Survey, covering the period April to September 2017, which can be found at www.finance.gov.ie. The results of this survey shows that, when pending applications are excluded, 84% of credit applications to banks were approved or partially approved. Purchases, replacement or lease of new vehicle/equipment is now provided as the main reason for applying for bank finance with 29% stating this is why they requested bank finance. The survey also showed continued positive trends in terms of trading performance, profitability and employment.
Government is focused on ensuring that all viable SMEs have access to an appropriate supply of credit from a diverse range of bank and non-bank sources. In this regard the Government has developed a number of initiatives to ensure that the supply of credit in the market is sufficient to meet the existing and future funding needs of SMEs. It should also be noted that the SBCI have reported that, as of year-end 2017, 24% of their loans (by value) were to SMEs operating in the agriculture sector.
In addition, to address the challenges posed to SMEs by Brexit, last year the Government announced a Brexit Loan Scheme. This provides affordable working capital financing to SMEs and small mid-caps that can demonstrate that they are either currently impacted by Brexit or will be in the future. The Scheme is operating from March 2018 to March 2020 and is delivered by the Strategic Banking Corporation of Ireland through commercial lenders and will serve to get much needed working capital into Irish businesses. The Scheme has made €300 million available to businesses of up to 499 employees, and will be open to both clients of State Agencies and businesses with no relationship with State Agencies.
All viable SMEs operating in Ireland should have the opportunity to access sufficient finance to meet their enterprise needs in a manner that supports growth and employment in the economy and the Government remains committed to the SME sector, as reflected in the Programme for a Partnership Government. Consequently, my Department and the Credit Review Office, working with the other relevant Departments and Agencies, will continue to monitor the availability of both bank and non-bank credit to viable SMEs including those in the farming community.
75. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which Ireland's economic situation continues to compete effectively with all others in the EU having particular regard to the situation in the United Kingdom; and if he will make a statement on the matter. [21676/18]
Amharc ar fhreagra78. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he remains satisfied that Ireland remains a competitive economy and attractive to indigenous investors and foreign direct investors; and if he will make a statement on the matter. [21679/18]
Amharc ar fhreagraI propose to take Questions Nos. 75 and 78 together.
The recovery in the Irish economy over the last number of years, in part, reflects the improvements in Ireland’s competitiveness. As of February 2018, Ireland’s competitiveness, as measured by the Central Bank’s Harmonised Competitiveness Index, has improved by approximately 19 per cent since 2008. The improvement in Ireland’s competitiveness has also been reflected in our international competitiveness rankings. For example since 2011 Ireland has risen from 24th to 6th on the IMD World Competitiveness Rankings.
The improvement in Ireland’s competitiveness reflects a moderation in both wages and prices, along with substantial productivity gains in our economy. However we cannot take this progress for granted, particularly given the challenges which the economy is likely to face in the coming years.
In particular, the Irish economy is particularly exposed to the UK’s decision to leave the EU. The immediate short run impact of this has been a loss of competitiveness, vis-à-vis the UK, as a result of the depreciation in sterling. Over the long run, any barrier to trade will impact on Irish growth. In addition to the impact of Brexit, potential changes in the international tax landscape, the risk of disruption to world trade and rising geopolitical tensions all have the potential to negatively impact the economic outlook over the coming years.
Given these challenges we need to build upon the progress we have already made, managing our public finances in a prudent manner and maintaining competitiveness-oriented policies so that the Irish economy is in the best possible position to weather any shocks that may emerge.
76. Deputy Bernard J. Durkan asked the Minister for Finance if his Department has identified specific inflationary tendencies within the economy or has indicated plans to address such issues; and if he will make a statement on the matter. [21677/18]
Amharc ar fhreagraInflation in Ireland has been subdued for several years. For example, on a Harmonised Index of Consumer Prices (HICP) basis, 2017 was the fifth consecutive year of inflation below 1 per cent. This phenomenon is not restricted to Ireland. Low inflation has been a feature of advanced economies in recent years. However, in 2017, inflation on a HICP basis across the euro area accelerated to 1.5 per cent, from 0.2 per cent in 2016.
This acceleration did not occur in Ireland, with inflation on a HICP basis averaging just 0.3 per cent in 2017. The divergence between inflation in the euro area and Ireland can in part be attributed to the impact of euro-sterling appreciation on consumer prices in Ireland. In turn this reflects the importance of the UK as a source of imports of consumer products.
While overall inflation has been subdued, services inflation has been robust, averaging 2.5 per cent last year. One important factor driving the increase in services inflation is strong growth in rent prices. Rent inflation averaged 6.7 per cent last year, a moderation from the 8.7 per cent increase in 2016. The pace of increase in rent prices, which in part reflects the ongoing shortage of housing, is of concern.
The Government’s strategy for tackling housing issues is set out in Rebuilding Ireland – An Action Plan for Housing and Homelessness. The overarching objective of the plan is to increase overall housing supply to a more sustainable level of around 35,000 homes per year by 2020. The Government has committed to spending over €6 billion out to 2021 to implement the plan.
77. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he remains satisfied regarding the ongoing progress of economic recovery; if he has identified particular issues requiring further attention; if he is satisfied that the economy remains well placed to maximise its potential' including job creation in the future; and if he will make a statement on the matter. [21678/18]
Amharc ar fhreagraRecent economic indicators have generally been positive, indicating that the recovery is continuing in a sustainable manner.
Preliminary real GDP growth of 7.8 per cent was recorded for 2017, but this is heavily distorted by activity in the multinational sector. Modified domestic demand, which adjusts for distortions in the Irish economy, is up 4.0 per cent in 2017. Growth is broad based with net exports also contributing positively to growth last year.
The strength of domestic demand is being felt in the labour market. Employment growth remains strong with an annual rate of 2.9 per cent recorded in 2017, representing the creation of over 61,000 additional jobs.
Recent data indicate that momentum has continued into 2018:
- Expansion in the manufacturing and services sectors continued in April according to the Purchasing Managers’ Index for the respective sectors
- Core retail sales, i.e., excluding car sales, are up 4.3 per cent in Q1 2018 y-o-y
- The Consumer Sentiment Index was 104.0 in April, well above its long run average.
- The seasonally-adjusted monthly unemployment rate for April was 5.9 per cent, down from 6.8 per cent in April 2017. As a result, the unemployment rate has fallen by almost two thirds since its peak of 16 per cent in early-2012.
As part of the 2018 Stability Programme Update, my Department forecast real GDP growth of 5.6 per cent this year. The labour market should benefit from this, with employment growth of 2.7 per cent (60,000 jobs) expected this year.
However, there are a number of risks at present including the UK’s decision to exit the EU, tax reform in the US and an increase in protectionist measures. There are also domestic challenges such as housing supply pressures and the related challenge of maintaining competitiveness.
The best way to mitigate such risks is to improve the resilience of the economy. The Government will play its part by continuing to implement competitiveness-oriented policies – including those that address emerging bottlenecks – and ensuring that the public finances continue to be managed in a prudent fashion.
79. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which he continues to monitor house property prices with a view to prevention of inflation through the sector; and if he will make a statement on the matter. [21680/18]
Amharc ar fhreagraMy Department continues to monitor developments in the wider property market, including trends in property prices, on an ongoing basis. According to the Central Statistics Office's Residential Property Price Index, national property prices increased by 0.7 per cent between February and March, and by 12.7 per cent on an annual basis. At the regional level, residential property prices in the 12 months to March 2018 increased by 12.1 per cent in Dublin and by 13.4 per cent outside of Dublin. Relative to peak, prices in Dublin are 23 per cent lower with those outside Dublin some 27.4 per cent lower.
The Government’s primary response to the current issues in the housing market is contained in ‘Rebuilding Ireland: An Action Plan for Housing and Homelessness’. The Action Plan sets out a comprehensive package of actionable measures designed to address the ongoing structural constraints within the construction sector and restore the housing market to a sustainable equilibrium. The implementation of these actions is monitored on an ongoing basis and reported publicly through quarterly progress reports.
80. Deputy Bernard J. Durkan asked the Minister for Finance if he will engage with the Central Bank with a view to the introduction of a statutory code of conduct to be operated by lenders and borrowers to provide particular recognition to the status of the borrowers who have continued to the best of their ability to make payments in respect of family home mortgages with a view to minimising the extent of family home repossessions while avoiding moral hazard but reducing the incidents of homelessness arising from policies as pursued by some lenders including unregulated third parties; and if he will make a statement on the matter. [21681/18]
Amharc ar fhreagraEnsuring that the interests of consumers of financial services are protected is a key priority for the Government and the Central Bank. A key element of the Central Bank’s role is ensuring that the consumer protection regulatory framework is fit for purpose and ensures that consumers best interests are protected.
Within the remit of the Central Bank’s responsibilities for safeguarding stability and protecting consumers, its approach to mortgage arrears resolution is focussed on ensuring the fair treatment of borrowers. This is realised through a strong consumer protection framework and ensuring that lenders have appropriate arrears resolution strategies and operations in place.
The Code of Conduct on Mortgage Arrears (CCMA) forms part of the Central Bank’s Consumer Protection Framework. It is a statutory Code first introduced by the Central Bank in February 2009, with the current CCMA becoming effective from 1 July 2013. The CCMA provides a strong consumer protection framework, aimed specifically at the process to be followed by relevant firms, to ensure borrowers in arrears or pre-arrears in respect of a mortgage loan secured on a primary residence are treated in a timely, transparent and fair manner.
Banks, retail credit firms and credit servicing firms servicing loans on behalf of unregulated loan owners are all required to comply with the CCMA. The overriding objective of the CCMA is to ensure the fair and transparent treatment of consumers in mortgage arrears or pre-arrears, and that there is due regard to the fact that each case of mortgage arrears is unique and needs to be considered on its own merits. The CCMA recognises that it is in the interests of borrowers and regulated firms to address financial difficulties as speedily, effectively and sympathetically as circumstances allow. It sets out the Mortgage Arrears Resolution Process (MARP), a four-step process that regulated entities must follow:
Step 1: Communicate with borrower;
Step 2: Gather financial information;
Step 3: Assess the borrower’s circumstances; and
Step 4: Propose a resolution
Each regulated entity must consider the borrower’s situation in the context of the solutions they provide, which may differ from firm to firm. The CCMA does not prescribe the solution which must be offered.
Under the CCMA, a regulated entity may only commence legal proceedings for repossession where it has made every reasonable effort to agree an alternative repayment arrangement (ARA) with the borrowers and other clear requirements are met or the borrower has been classified as not co-operating. This framework requires lenders to exhaust the options available from the suite of ARAs offered before taking action which may result in the borrower losing his/her home (whether by voluntary sale or repossession). During the legal process, borrowers have opportunities to re-engage with lenders to find a solution. In some circumstances, however, loss of ownership may be unavoidable.
In February this year, I wrote to the Governor of the Central Bank and requested that they carry out a review of the CCMA to ensure it remains as effective as possible. I have asked that the report be completed as soon as practically possible.
Finally, as the Deputy will be aware, most loan agreements include a clause that allows the original lender to sell the loan on to another firm. The Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 (“the 2015 Act”) was introduced to fill the consumer protection gap where loans are sold by the original lender to an unregulated firm. Under the 2015 Act, if the firm who bought loans from the original lender is an unregulated firm, then the loans must be serviced by a ‘credit servicing firm’ which is regulated by the Central Bank. Credit Servicing Firms are typically firms that manage or administer credit agreements such as mortgages or other loans on behalf of unregulated entities.
Credit servicing firms must act in accordance with the requirements of Irish financial services law that applies to ‘regulated financial service providers’. This ensures that consumers, whose loans are sold to another firm, maintain the same regulatory protections that they had prior to the sale, including under the various statutory Codes of Conduct issued by the Central Bank such as the Consumer Protection Code 2012, Code of Conduct on Mortgage Arrears 2013, and the SME Regulations. Contractual terms are not changed by the sale of the loan.
Over the last number of months, there has been a lot of concern regarding loan sales, specifically in relation to PTSB. Arising from this, Deputy Michael McGrath published a Bill on the regulation of loan owners. This Private Member’s Bill is complex and there are multiple issues with it which need to be resolved. However, the Government supports the intent behind the Bill and has committed to assisting the Deputy in improving the Bill to make it more effective. Officials in my Department have been discussing the Bill with Fianna Fáil and are actively preparing amendments which will make the Bill effective and rectify technical drafting issues.
81. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which budgetary projections remain on target for the balance of 2018; the extent to which he expects adjustments to be required in 2019; and if he will make a statement on the matter. [21682/18]
Amharc ar fhreagraThe recently published Stability Programme Update 2018 included an update of the fiscal outlook for 2019. The projected general government balance remains unchanged from Budget 2018 at 0.3 per cent of GDP.
Regarding the performance of taxation receipts, I would first caution that it is still too early in the tax collection calendar to discern any firm trends, which in turn underpins the decision to leave this years tax forecast unchanged from Budget 2018.
Nonetheless, tax revenues to end-April are performing well, coming in slightly below profile by 1.4 per cent (€202 million). Furthermore, tax revenues are showing healthy year on year growth of 3.6 per cent (€516 million).
Total gross voted expenditure of €19,216 million to end-April was €74 million (0.4 per cent) below profile. This is made up of gross voted current expenditure running slightly ahead of expectations, 1.1 per cent (€192 million), chiefly due to a timing issue, and gross voted capital expenditure which is €266 million (19 per cent) below profile.
These forecasts will be assessed and adjusted accordingly as part of the Budget 2019 process this October.
Finally, I would like to remind the Deputy that performance against profile of main exchequer items are discussed on an ongoing basis in the Fiscal Monitor. This is published on a monthly basis and is available for the Deputy’s convenience here .
82. Deputy Bernard J. Durkan asked the Minister for Finance if provision will be made by a statutory means or otherwise to ensure that venture capital purchasers of loan books are required to comply with guidelines set down by the Central Bank and the need to ensure the ongoing accommodation of borrowers who continue to make consistent efforts to meet repayment requirements; and if he will make a statement on the matter. [21683/18]
Amharc ar fhreagra86. Deputy Bernard J. Durkan asked the Minister for Finance the steps he will take to protect homeowners and small business operators from being dispossessed by third party borrowers not covered by a reasonable code of conduct with particular reference to those who have continued to make payments to the best of their ability notwithstanding the fact that they did not cause or contribute to the economic recession; and if he will make a statement on the matter. [21687/18]
Amharc ar fhreagraI propose to take Questions Nos. 82 and 86 together.
Government policy has been that the sale of a loan book should not result in a loss of protections for borrowers. The Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 restored protections to borrowers by making credit servicing a regulated activity and requiring firms which undertook credit servicing to be authorised by the Central Bank. Under the Act, purchasers of these loan books must either be regulated by the Central Bank themselves or else the loans must be serviced by a credit servicing firm who is regulated by the Central Bank.
The Act also prevented loan owners giving instructions to credit servicing firms which would be prohibited if the owner was regulated and also prohibited the credit servicing firm from implementing such instructions. Therefore, it is not possible for unregulated entities to act on behalf of lenders.
Regulated credit servicing firms and other regulated entities must comply with all relevant requirements of financial services legislation, including the regulatory requirements set out in the Central Bank’s statutory Codes of Conduct and Regulations. These requirements include the Consumer Protection Code 2012 and the Code of Conduct on Mortgage Arrears 2013 (CCMA).
Provision 56 of the CCMA provides that a regulated entity may only commence legal proceedings for repossession of a borrower’s primary residence where the regulated entity has made every reasonable effort under the CCMA to agree an alternative repayment arrangement with the borrower or his/her nominated representative, and the specific timeframes set out in the CCMA have been adhered to or the borrower has been classified as not co-operating and notified in accordance with the CCMA.
I should also say that a customer who has a complaint against a regulated financial service provider which is not resolved by the provider’s internal complaints mechanism may make a complaint to the independent Financial Services and Pensions Ombudsman.
The Deputy may also be aware of a recent Private Member’s Bill which would require the regulation of loan owners. The Government supports the intent behind the Bill and has committed to assisting the Deputy in improving the Bill to make it more effective.
83. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he continues to make provision for issues arising from Brexit in such a way as to maximise opportunities for the economy; and if he will make a statement on the matter. [21684/18]
Amharc ar fhreagraMy Department has been to the fore in producing and funding a number of Brexit-related studies, both before and since the UK's referendum decision, to assess and prepare for the impact of a UK exit from the European Union. All of these Brexit-related studies are available on my Department's website. In addition, regular updates of my Department’s Macro-Economic forecasts take account of the impact of Brexit.
While the results in the 'Modelling the Medium to Long Term Potential Macroeconomic Impact of Brexit on Ireland' study published by my Department and the ESRI, show that the potential impact of Brexit on the Irish economy will be significant under all scenarios, with output below what it otherwise would have been in a no Brexit scenario, it is important to note that the economy will continue to grow, albeit at a slower pace than it otherwise would have. It should also be noted that these results are based on a “no policy change basis”. However, with the future trade path between the UK and EU still unknown, it is crucially important that we prepare our economy for the challenges ahead.
Indeed, as we cannot control the international environment, the best way and most immediate policy under the Government's control to counter the likely negative economic impacts of Brexit is to prudently manage the public finances in order to ensure that Ireland's economy continues to remain competitive in the face of future economic headwinds. In this context, the Government has taken a number of important steps to maximise opportunities for the economy and to prepare our economy for the challenges of Brexit, including in Budgets 2017 and 2018, the Action Plan for Jobs, the Ireland Connected trade and investment strategy, and the preparation of a new 10-year Capital Plan.
As discussions on the future relationship between the UK and the EU progress, my Department will continue to monitor the economic impacts of Brexit, including carrying out relevant analysis to make provision for issues arising from Brexit, and contingency plan for the future challenges ahead.
84. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which banks operating here have been penalised financially for their activities in other jurisdictions, some of which would seek to offload such responsibilities to customers here; and if he will make a statement on the matter. [21685/18]
Amharc ar fhreagraPart IIIC of the Central Bank Act 1942, as amended, provides the Central Bank of Ireland with the power to administer sanctions in respect of the commission of prescribed contravention(s) by Regulated Financial Service Providers (RFSP) regulated by the Central Bank of Ireland, and by persons presently or formerly concerned in the management of RFSPs who have participated in the prescribed contravention(s) committed by the RFSP.
The Central Bank of Ireland is not in a position to comment on financial penalties imposed by regulators in other jurisdictions.
Further information on the Central Bank's Administrative Sanctions Procedure can be found on the Bank's website, available at the following link: www.centralbank.ie/regulation/how-we-regulate/enforcement/administrative-sanctions-procedure.
85. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which at European level credit is provided to the economy for its contribution towards economic recovery; and if he will make a statement on the matter. [21686/18]
Amharc ar fhreagraThe European economy continues to grow at a solid pace, with the euro area having grown at its fastest rate in ten years in 2017. The recovery in growth has been accompanied by improved credit conditions and a rise in lending.
The provision of credit is an important driver of economic growth as credit is used to fund consumption and investment, while it is also a key transmission channel for monetary policy. In the euro area, lending growth turned positive in 2015 after contracting during the crisis, and has strengthened consistently since then. Loans to the euro area private sector rose by 3 percent on an annual basis in March 2018, reflecting continued increases in lending to both households and non-financial corporations (NFCs). In March, the growth rate of loans to households rose from 2.9 percent to 3.0 percent, while NFC loan growth rose from 3.2 percent to 3.3 percent.
In Ireland, credit has been slower to pick up following the crisis, however loans to the private sector have seen positive growth since November 2017. While this was initially driven by positive growth in lending to households, lending to NFCs also began to grow in 2018.
There has been a moderation in European growth in the first quarter of 2017. Flash estimates showed quarterly GDP growth in the euro area slowed to 0.4 percent, from 0.7 percent in Q4 2017. While a moderation has yet to bear out in lending data, this highlights the need for continued monitoring of developments in the European economy and the factors driving growth, including lending conditions, consumption and investment. An appropriate balance of fiscal, monetary and structural reform policies is necessary to ensure sustainable growth is maintained.
87. Deputy Bernard J. Durkan asked the Minister for Finance the way in which Ireland's economic performance compares with other EU countries in the eurozone or outside; and if he will make a statement on the matter. [21688/18]
Amharc ar fhreagraAccording to EUROSTAT, the statistical office of the European Union, Ireland was the fastest growing economy in the EU in 2017. First estimates show that real GDP growth in Ireland was 7.8 per cent in 2017 compared with real GDP growth in both the EU and euro area of 2.4 per cent. While headline GDP figures can be exaggerated in an Irish context, other indicators such as consumer spending, labour market developments and taxation receipts confirm the economy performed strongly last year.
According to the European Commission, Ireland is also expected to be among the fastest growing economies in Europe this year with GDP growth of 5.7 per cent in 2018 compared with growth of 2.3 per cent for both the EU and the euro area. This is similar to my Department’s forecast of 5.6 per cent growth this year as set out in the Stability Programme Update 2018 published last month. The IMF is forecasting Ireland's economy to grow by 4.5 per cent in 2018 compared with global GDP growth of 3.9 per cent and growth of 2.4 per cent in the euro area.
The Government’s priority is to ensure continued, sustainable economic growth in order to further increase living standards and reduce unemployment.
88. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which mortgage interest rates applicable here compare with the rest of Europe; and if he will make a statement on the matter. [21689/18]
Amharc ar fhreagraThe Central Bank of Ireland has informed me that the most recently available statistics on interest rates charged on new mortgage business in the euro area are detailed in the table. These statistics are harmonised across the euro area, and relate to euro-denominated lending to euro area residents, broken by broad interest rate type; variable and fixed. There is no breakdown available for property type. Therefore, the attached table relates to rates for PDH, BTL and holiday homes.
|
New business (1) (%) |
Total (2) |
Variable(3) |
Fixed |
|
Country |
2018-03 |
2018-03 |
2018-03 |
|
Austria |
1.79 |
1.56 |
2.04 |
|
Belgium |
1.96 |
1.58 |
2.01 |
|
Cyprus |
2.49 |
2.52 |
n/a |
|
Germany |
1.89 |
2.05 |
1.87 |
|
Estonia |
2.42 |
2.16 |
4.24 |
|
Spain |
1.97 |
1.62 |
2.17 |
|
Finland |
0.92 |
0.90 |
1.82 |
|
France |
1.58 |
1.51 |
1.58 |
|
Greece |
2.74 |
2.69 |
3.14 |
|
Ireland |
3.02 |
2.96 |
3.07 |
|
Ireland* |
3.21 |
3.34 |
3.11 |
|
Italy |
1.88 |
1.54 |
2.07 |
|
Lithuania |
2.17 |
2.07 |
4.89 |
|
Luxembourg |
1.79 |
1.56 |
1.97 |
|
Latvia |
2.64 |
2.38 |
8.00 |
|
Malta |
2.76 |
2.89 |
2.58 |
|
Netherlands |
2.39 |
1.94 |
2.47 |
|
Portugal |
1.49 |
1.51 |
1.47 |
|
Slovenia |
2.45 |
1.98 |
2.86 |
|
Slovakia |
1.65 |
1.75 |
1.65 |
|
Euro area |
1.86 |
1.63 |
1.92 |
Notes:
* These rates for IE exclude loan renegotiations. There is limited data availability of these rates for other euro area countries. Rates available on a comparable basis include renegotiations.
1. New business comprises all financial contracts which specify for the first time the interest rate, including all new (re)negotiations of existing loans. Detailed definition can be found here .
2. Euro-denominated loans for house purchase; total floating rate or initial rate fixation to euro area households (percentages per annum, rates on new business)
3. Euro-denominated loans for house purchase; floating rate or initial rate fixation of up to one year to euro area households (percentages per annum, rates on new business)
Source:
- ‘Total’ and ‘variable’ rates can be downloaded from the ECB’s user-friendly ‘Euro area statistics’ page here. Select ‘loan for house purchase, total’ and ‘loan for house purchase, x < 1Y’. Select ‘Euro area’ and ‘Ireland’ and click ‘Download’. A link will appear under the series selected, and when clicked will open an excel file with all individual euro area countries rates from current month back to 2003. The caveat on the IE rate is that it impacted by renegotiations. A more relevant comparative source for IE is found in columns D and F in Table B.2.1, found here.
- ‘Fixed’ rates by euro area country can be downloaded from here. A more relevant comparative source for IE is found in columns D and F in Table B.2.1, found here.
- Specific rates for Ireland by property type are available in Table B.3.1 of the Central Bank of Ireland Retail Interest tables here, for which there are no comparative euro area rates.
89. Deputy Catherine Martin asked the Minister for Public Expenditure and Reform if wardens in the Phoenix Park are sufficiently trained to euthanise an injured deer in the event of an accident; the way in which this process operates; and if he will make a statement on the matter. [21641/18]
Amharc ar fhreagraThe Commissioners of Public Works employ a Deer Keeper in the Phoenix Park. He is fully trained and carries out humane dispatches of deer when required following the OPW Deer Safe Operating Procedures which have been approved by the Department of Agriculture, Food and the Marine.
90. Deputy James Browne asked the Minister for Public Expenditure and Reform the position regarding raising the compulsory retirement age from 65 to 70 years of age for public servants who were recruited before 1 April 2004; and if he will make a statement on the matter. [21691/18]
Amharc ar fhreagraAs the Deputy is aware, on 5 December 2017, the Government agreed that the compulsory retirement age of most public servants recruited before 1 April 2004 should be increased to age 70. Primary legislation is required for this change to be implemented. The Attorney General’s Office has been requested to prioritise the drafting of the necessary legislation so that the new compulsory retirement age will become effective as soon as possible.
It is not possible to determine the length of time it will take for a Bill to be drafted and pass through both Houses of the Oireachtas, given the need for meticulous drafting, ongoing detailed policy considerations, and the scheduling requirements of the Houses of the Oireachtas. However, the drafting process is underway and the Bill is on the list of priority legislation for publication in the current session. Indeed, I understand that the drafting of the legislation is significantly advanced with an expected publication date, subject to Government approval, of next month.
In order to make some accommodation for public servants who reach the age of 65 in the period between the Government Decision of 5 December and the commencement of the necessary legislation, the Government approved some limited interim arrangements which became effective from the date of the Government Decision. The interim arrangements (which have to respect the current statutory position of the compulsory retirement age of 65) will, through retire and re-hire, enable pre 2004 public servants who reach the age of 65 to remain in employment until they reach the age of eligibility for the State Pension (Contributory), which is currently 66. Details of these interim implementation arrangements have been put in place by the relevant sectors.
