Tuesday, October 09 12:54:56
The ISEQ remained in the red this morning after the IMF said that Ireland would be the only eurozone country to register growth this year and next, though this will be a "bumpy" recovery.
By 12:30, the index was down 2.17 points to 3,295.12.
Ireland's economy is the only one growing in the eurozone but the recovery remains "bumpy", a major report from the IMF on euro area growth said today. "Except for Ireland, which is in a bumpy recovery, the recessions in the economies of the euro area periphery have been deeper, and recovery is generally expected to begin only in 2013, once adjustment moderates," it said. It also said it underestimated the effects that austerity would have on the Irish economy. It said it did not believe tax increases and spending cuts would have cost so many jobs. The euro zone economy will shrink more than expected this year and barely grow in 2013 because of an escalation of the sovereign debt crisis, which will remain the main risk to growth, the International Monetary Fund said today. "The highest policy priority in Europe is to resolve the crisis in the euro area. Resolving the euro area crisis requires progress toward banking and fiscal union in combination with short-term demand support and crisis management at the euro area level," the IMF said in its World Economic Outlook.
Shares in Aer Lingus fell 2c to E1.08 after it warned staff that, unless its near three quarters of a billion euro pension deficit is addressed, retirees of the airline could be left with just 4pc of the pension pot to draw on. As of May 31st 2012, the IASS pension shortfall was approximately E748m. "To put this in perspective, if the IASS had been wound up on May 31st 2012, current employees and their beneficiaries not yet in receipt of a pension would have received approximately 4pc of their expected IASS pension benefits," the airline said. To resolve the pension issue, Aer Lingus has proposed that the IASS would be closed to new members and benefit accrual for current members would cease. The IASS investment policy would be changed by the trustees to reduce risk by investing in bonds whose cash flows broadly match obligations. This approach would result in higher pensions than on a wind-up of the IASS but is at the sole discretion of the IASS trustees.
Shares in insurers, FBD, fell 9c to E9.75. At the Road Safety Authority's annual academic lecture last night, the Minister for Transport outlined a number of pending proposals under consideration in the upcoming Road Traffic Bill. "The on-going crusade in tightening up on driving offences is a welcome development in the efforts to reduce road fatalities. The introduction of penalty points in 2002 has been a major step forward in this regard. In due course, fewer accidents will feed through into lower claims for the insurance companies, like FBD, where motor accounts for c.40pc of premiums," said Goodbody's analyst, Eamonn Hughes.