Ireland

The coronavirus will hit Europe with a deeper recession than anticipated, with Ireland’s economy set to shrink 8.5 per cent this year,  according to a new forecast by the European Commission, the <em>Irish Times</em> reported. “The economic impact of the lockdown is more severe than we initially expected. We continue to navigate in stormy waters and face many risks, including another major wave of infections,” commission executive vice president Valdis Dombrovskis said.

The State’s corporate watchdog has moved to ease concerns of directors of businesses seeking to trade through financial problems caused by the coronavirus economic shock, but where the company ultimately goes under, The Irish Times reported. When liquidators are appointed to insolvent companies, they must issue a report to the Office of the Director of Corporate Enforcement (ODCE) and initiate court proceedings seeking to have directors restricted, unless they are granted a waiver by the watchdog from doing so.

The High Court in Ireland has granted a restriction order against the directors of an insolvent company, Winning Ways Ltd, Pinsent Masons reported. The order was requested by the liquidator of the business at the request of the Office of the Director of Corporate Enforcement (ODCE). The judgment confirms that the onus is on directors to prove that they acted honestly and responsibly when raising a defence against a restriction order under section 819 of the Companies Act 2014.

Mothercare’s Irish franchise owner placed its 14 baby products stores into liquidation on Friday, becoming one of the first major retail outlets in Ireland to blame the coronavirus lockdown for its demise, Reuters reported. Mothercare Plc still operates around 1,000 overseas franchise stores following the collapse of its UK business, where it fell victim to stiff competition from online retailers and rising costs across the retail industry.

The economic, personal, and business challenges from the Covid 19 pandemic across Ireland and across the European Union are enormous, The Irish Times reported. One fact highlights this. In the EU in the past eight weeks some 50 million people – about 10 per cent of the entire population – now rely on government-provided employment subsidies. Not only can this not continue from a Government financing perspective, but it is a crushing blow for people who cannot find work or face long-term unemployment.

Once again, Irish banks are at the sharp edge of a global crisis, Bloomberg News reported. In 2008, it was the melting away of liquidity. Just over a decade on, it’s Covid-19. AIB Group Plc and Bank of Ireland Group Plc are the worst performers in the Bloomberg Europe Banks and Financial Services Index over the past year, as the pandemic amplifies investor wariness toward the lenders. To an extent, the legacy of the last crisis is shaping investor responses toward Ireland’s lenders this time round.

The Government has been urged to make temporary changes to the insolvency laws to prevent businesses unable to meet debts due to the coronavirus from going into bankruptcy, The Irish Times reported. Dublin-based legal firm Philip Lee said certain aspects of the regulations here needed to be “dialled down” to enable companies trade through the current crisis. In particular, it called for the penalties for trading while insolvent to be temporarily lifted.

More than 45,000 mortgage payments breaks have been granted by banks or are close to completion, new figures show, The Irish Times reported. This is equivalent to 5 per cent of all mortgages in the Republic. Data from Banking Payments Federation Ireland shows close to 14,000 payment breaks for SMEs were granted or are in the process of being agreed over the past three weeks. In addition, banks are “well advanced” in processing 3,200 requests for working capital facilities, chief executive Brian Hayes. He said it has largely been SMEs seeking payment breaks to date.

A total of €34 billion has been wiped off the value of Iseq 20 companies over the past three months as the Covid-19 pandemic spooked investors in global equities, The Irish Times reported. AIB and Bank of Ireland are the biggest losers, shedding 69 per cent and 65 per cent of their market values respectively. As a result, AIB’s market value has fallen by almost €6 billion while Bank of Ireland’s has dropped by €3.4 billion. Combined, the State’s two largest domestic retail banks are worth just €9.3 billion.

The Central Bank has warned that the coronavirus crisis is likely to blow a €22 billion hole in the State’s finances and could see half a million people losing their jobs, The Irish Times reported. In its latest quarterly bulletin, published on Friday, it says lost tax revenue and increased spending on various support schemes will see the exchequer move from a €2.2 billion surplus to a €19.6 billion deficit this year. It predicts the crisis will lead to the loss of up to 500,000 jobs as the economy shrinks by 8.3 per cent.