Public Policy Bulletin, 25 November 2022

In this week’s Public Policy bulletin, we take a look at the latest economic assessments from both the Fiscal Advisory Council and Central Bank as well as the Government’s launch of the first ever National Hub Summit for remote working. In addition, we examine this week’s latest statistical releases from the Northern Ireland Statistics and Research Agency on 2021 business performance and levels of youth unemployment as well as a significant judgment from the Court of Justice of the EU on the validity of public beneficial ownership registers. 

Fiscal Advisory Council publishes latest Fiscal Assessment Report 

The Irish Fiscal Advisory Council (IFAC) this week published its latest Fiscal Assessment Report “A Budget in Time of Inflation” in which it assessed the Government’s Budget 2023 in terms of the broad fiscal stance, the economic and budgetary forecasts, and Ireland’s overall compliance with fiscal rules. Noting how Ireland’s economic growth had slowed considerably during 2022, the Council acknowledged that while Irish economic activity continues to expand in cash terms, inflation had weakened real incomes. With Budget 2023 now forecasting gross national income growth of just 0.4 percent in 2023, this marks a significant contraction from projected GNI growth of 5 percent this year, and actual growth 15 percent last year.

Despite this however, IFAC’s report was broadly supportive of the Government’s budgetary strategy, observing how it struck the "appropriate balance between protecting vulnerable households and avoiding inflation".

Central Bank increases capital buffer in response to global financial conditions

In its second Financial Stability Review of 2022, the Central Bank this week announced an increase in the Countercyclical Capital Buffer (the level of reserves banks must keep) in response to the tightening of global financial conditions and what it sees as “increased downside risks given the size of the energy and inflation shock” in Ireland.

Consistent with previous guidance, the Counter-Cyclical Capital Buffer rate will now increase to 1 percent marking a further step towards the gradual rebuilding of the buffer rate to 1.5 percent.  

Launch of National Hub Summit to promote and expand remote working in rural areas 

Minister for Rural and Community Development, Heather Humphries TD, this week made a series of announcements in support of remote working as she launched the first ever National Hub Summit in Athlone. 

The summit brought together businesses, hub managers, remote workers and and policy makers, less than 18 months after the launch of the Connected Hubs platform to further develop the Government’s expansion of its remote working initiative. The Connected Hubs online platform was originally launched by the Government in May 2021 to allow people to choose from a network of remote working hubs and hot desks around the country from which they could work.

Speaking at the launch of the summit, Minister Humphries announced that a new pilot scheme that will match employers and employees to specific hubs will be launched in the New Year. The scheme will introduce the concept of ‘anchor tenants’ and the use of Connected Hubs as a ‘second workplace’ for staff. In addition, funding of up to €50,000 has been granted to all local authorities outside of Dublin so that they can market their towns and villages as destinations for people who want to move to rural Ireland. Moreover, the Minister signalled her intention to explore the idea of encouraging companies to provide a stipend to remote workers to cover the costs associated with using the Connected Hubs platform. More than 10,000 people will have registered with the Connected Hubs network by the end of the year.

Northern Ireland Annual Business Inquiry Statistics 2021 released

The Northern Ireland Statistics and Research Agency (NISRA) this week released headline results from its 2021 Northern Ireland Annual Business Inquiry survey. Outlining how the economy experienced “higher than usual growth” year on year between 2020 and 2021, the NISRA noted how the major economic impact of Covid-19 restrictions during 2020 should be borne in mind when assessing the 2021 figures.

Some of the key findings reported include:

• Total aGVA was estimated to be worth £30.6 billion at basic prices in 2021 - representing a rise of 19.4 percent (£5.0 billion) compared to 2020.
• Turnover for NI businesses increased by 13.6 percent between 2020 and 2021 to £77.1 billion, while the cost of purchases of goods, services and energy increased by 10.5 percent to £48.7 billion over the same period.
• The key driver of aGVA growth was in the NI Non-Financial Services sector which increased by £1.8 billion (17.9 percent) between 2020 and 2021.  The majority of aGVA growth in this sector is attributable to the Transport and Storage section which increased by £581 million (39.4 percent).
• Retail and Wholesale trade within the Distribution sector recorded aGVA growth of £868 million (14.4 percent) over the period in question.
• aGVA in the Production sector increased by £1.1 billion (15.5 percent) from 2020 to 2021. The key driver in this was the Manufacturing section, which recorded aGVA growth of £891 million (18.2 percent).
• There was also an increase in aGVA in the Construction sector of £1.2 billion (47.5 percent) between 2020 and 2021.

Northern Ireland Labour Force Survey – Young People Not in Education, Employment or Training (NEET)

In its latest batch of statistics derived from its quarterly Labour Force Survey, the NISRA estimates that there were approximately 17,000 young people aged 16 to 24 years in Northern Ireland who were not in education, employment or training (NEET) in the period July to September 2022. This was equivalent of 8.8 percent of all those aged 16 to 24 years in NI.

According to the survey, the NEET rate among males aged 16 to 24 was 8.3percent and among females was 9.2 percent in July to September 2022 while the number who were NEET increased from the previous quarter by 2,000 and decreased by 7,000 over the year.

In July to September 2022 there were an estimated 11,000 young people aged 16 to 24 years who were not in education, employment or training and who were not looking for work and/or not available to start work (economically inactive). The remainder of those who were not in education, employment or training were looking for work in the previous four weeks and available to start within the next two weeks (unemployed). 

Court of Justice of the EU rules public beneficial ownership registers ‘invalid’

In a significant judgment issued this week, the Court of Justice of the EU (CJEU) held that the provision of the anti-money-laundering directive whereby EU Member States must ensure that the information on the beneficial ownership of corporate and other legal entities incorporated within their territory is accessible in all cases to any member of the general public is invalid.

According to the Court, the general public’s access to information on beneficial ownership constitutes a serious interference with the fundamental rights to respect for private life and to the protection of personal data as enshrined in Articles 7 and 8 of the EU Charter of Fundamental Rights.

On foot of the judgment, both Luxembourg and the Netherlands on Wednesday closed their public beneficial ownership registers.

The CJEU this week issued a press release on the content of its judgment.