Kyran Fitzgerald.


After 2016, the question is who has the steering wheel?

Voter disillusion at the effects of globalisation has sent shock waves through the western world, and has caused a great deal of uncertainty for world leaders and trade negotiators, writes Kyran Fitzgerald.

After 2016, the question is who has the steering wheel?

Will 2016 be remembered as the year in which the drunk grabbed hold of the steering wheel and the car left the road?

Certainly, the hotheads appeared to drive the agenda as longer-term business considerations were left to one side.

Trade deals were bogged down as leaders responded to mass voter disillusion with globalisation and its effects.

Political events dominated as new uncertainties appeared on the horizon following a series of votes.

Centrist politicians were under the cosh. Few expected that the year would bring the departure from office of David Cameron and Matteo Renzi, never mind the defeat of Hillary Clinton. Morale among officials in Brussels is believed to be close to the floor.

While the ESRI and Ernst & Young have just forecast a period of steady growth for the Irish economy up to 2020, in truth, we will not know for quite some time just quite how the UK referendum result of June 23 will play out.

The Irish Government now appears to be rather more isolated these days across the EU, particularly in the wake of publication of the Competition Directorate General’s opinion on the tax arrangement between the Irish Government and Apple.

In January, a weak euro was boosting Irish exports while bumper IDA figures confirmed a bumper foreign investment harvest.

Fine Gael talked up the recovery and vowed to scrap the Universal Social Charge. The voters were having none of it. The result was a political stalemate lasting into the late Spring. At the start of the year, Dublin commuters were facing into four days of strikes on the Luas following the submission of a 50% pay claim.

A four-month stop-start dispute ensued before a deal in early June was reached between operators Transdev and SIPTU. It provided for productivity-linked pay increases of 15.6% to 18.3% up to September 2020. The Luas deal acted as a catalyst. Garda unions joined forces throwing down the gauntlet of a threatened strike to the Government.

The result, in early November, was a deal worth €40m secured on foot of a Labour Court recommendation which triggered matching demands from other unions which have up to now stood by the Lansdowne Road Agreement, which provides for a gradual restoration of public pay to pre-recession levels.

In the US, the election campaign cranked up. But as we now know, the tweeting celebrity candidate Donald Trump overturned the conventional wisdom on electioneering. In late February, we warned that it was “time to think the unthinkable” about a possible Trump victory.

Mark Zandi of Moodys warned that such a result could trigger a depression. Analysts also fretted about the possibility of a trade war with China, not to mention Mexico.

In late June, another unthinkable happened and sterling went into freefall after the UK referendum result.

The old adage about Britain sneezing and Ireland catching a cold appeared to hold as shoppers flocked North and mushroom producers succumbed.

Irish growth has been trimmed back as investment was put on hold and consumers grew more cautious. The new UK Prime Minister Theresa May vowed to repair some of the fissures in British society, promising reforms to corporate government including greater transparency on executive compensation and worker directors on boards.

She rowed back, however, on some of these commitments when the Autumn Statement was unveiled by her Chancellor, Philip Hammond.

Two bogeymen of the year soon emerged — fashion retailer Sir Philip Green and sports goods king and Newcastle Utd-owner, Mike Ashley.

In April, the venerable BHS collapsed into administration, not long after it had been sold to the largely unknown Dominic Chappell by its longtime owner, Sir Philip.

Mr Green came under sustained criticism over the scale of the deficit in the BHS pension fund. He made promises concerning the fund, but has yet to stump up. Mike Ashley, meanwhile, was shamed when his tough treatment of employees was brought to peoples’ attention.

He was slated over the “Victorian” working conditions and zero hours working in his company. In September, he returned to the company as chief executive. Here, we were reminded of the shoddy treatment of another workforce when the development plans for the Clerys building in O’Connell Street were unveiled. The fate of the Clerys workers highlighted the lack of proper regulations aimed at protecting the pension rights of employees of companies which end up in liquidation.

In Britain, an industry-funded lifeboat system is in place to provide workers with some protection.

No such system exists here. Executive pay is a regular source of controversy along with the behaviour of financial institutions.

Last year, the IFA and its former CEO, Pat Smith were in the eye of the storm. This year it was the turn of Ornua, the former Irish Dairy Board.

It emerged that its top team of nine shared €9m in fees over a two-year period. This coincided with a drop of 40% in milk prices. There was also concern at agribusiness company Aryzta over a lack of transparency.

Many top banks continued to endure a torrid time, as US regulators tightened the noose. Deutsche Bank, facing billions in fines over market manipulations, announced a loss of €6bn for its third quarter, but it was Italy’s banking sector which truly was in the eye of the storm.

Since then, speculation has been rife that troubles in the country’s banks could spread contagion.

Deutsche eventually reached a compromise deal with US officials, but the troubles of banks such as Unicredit and Monte dei Paschi look to be deep seated.

EU laws now provide for bail-ins of bondholders and even depositors. However, the political ramifications of such a move at the behest of Brussels could be severe in a country where support for the euro-sceptic populist Five Star movement is on the rise.

The election of Donald Trump, however, was not followed by armageddon in equity markets as some had predicted.

In fact, share markets have rallied strongly on the back of indications that the incoming administration is set to slash taxes and boost investment spending with the co-operation of a Republican-dominated Congress.

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