11 Dec 2018

In the first 11 months of the year, new private car sales totalled 120,379

"Vehicles licensed for the first time" data from the CSO show that sales of new private cars were +3.3% y/y in November, trimming the year to date decline to -4.8% y/y. In the first 11 months of the year, new private car sales totalled 120,379 representing a reduction of 4.8% y/y.

Irish Economy: Car sales rise in November
 

Used car sales, mainly imports from sterling-based retailers, were +0.9% y/y in November,  with the year to date growth rate of 7.9% y/y producing sales of 92,995 vehicles. We track goods vehicle sales as an indication of underlying business investment. Sales of new vehicles were +3.6% y/y in November, with the year to date growth rate at 5.8% y/y, while second-hand goods vehicle sales slipped 1.8% y/y in November, although the year to date growth rate here is a still strong 5.4% y/y. Combining new and used sales shows annual growth of 0.4% for cars and 5.7% for goods vehicles in the year to date. With economic growth of c. 7%  and employment and earnings both posting annual growth of c. 3% at this time you would normally expect to see a boom in total car sales, but structural factors are likely to be at play here. 


Irish Economy: NTMA cancels another €500m of legacy debt


Ireland’s NTMA yesterday announced the cancellation of another €500m of the Irish 2049 Floating Rate Treasury Bond. These bonds are linked to the landmark IBRC transaction in 2013, which was a major milestone on Ireland’s journey back to creditworthiness. To date the NTMA has repurchased €13.5bn (nominal) of the €25bn of bonds issued as part of the ‘Prom Note’ deal, with €4.0bn of these repurchases taking place in the year to date. All of the bonds were held by the Central Bank of Ireland, whose holdings have previously attracted adverse comment from the ECB relating to monetary financing concerns, although Frankfurt has since acknowledged the progress made in reducing the stock of IBRC-related assets. While the effective servicing cost of the IBRC-related bonds is immaterial (as the Central Bank repatriates most of its profits to the Exchequer), the repurchases serve to improve the optics of Ireland’s headline debt metrics. Separately, the NTMA has also announced details of its final auction of 2018. The agency will offer €500m of 12 month T-bills this Thursday. 


UK PM to tour Europe


UK Prime Minister, Theresa May, confirmed in Parliament yesterday afternoon that she would not be pressing ahead with the ‘meaningful vote’ on her Brexit deal at this stage, admitting it would have faced defeat. The scenes in UK Parliament yesterday were more than chaotic.
Instead she said she would talk to Brussels and embark on a tour of European capitals to try and find support for some key changes. The big issue is the Irish backstop, where the PM is facing considerable opposition to the current legal text which would leave the UK unable to exit this unilaterally. However PM May looks to be facing an uphill struggle here with Brussels seemingly not willing to look at a reopening of the legal Withdrawal Agreement text and more focused on the idea of adding a side declaration which might provide for a show of good faith with regards to the UK’s control over its exit from the backstop and indeed the timing around this, but not give the UK sole legal control. Indeed, European Council president Tusk said last night that the EU was “ready to discuss how to facilitate the UK ratification” but warned there could be no renegotiation of the Brexit deal or backstop. There is an EU Summit taking place later this week (13-14 Dec) and this will now be focused on Brexit talks whilst the EU has again indicated it will be ramping up no deal planning. 


No confidence motion?


Moving forward from here it appears that Mrs. May is determined to try and secure concessions with the idea that she would then put a re-worked proposal to the vote. However, short of May getting a very sizeable concession on the Backstop, she is still likely to find she is short of the support needed to pass the ‘meaningful vote’. As such we continue to judge that there is a good chance that a motion is carried that sees Parliament gain greater control of the Brexit process, perhaps in the New Year, which would likely see a Brexit process progressed that is of a softer nature, quite possible a Norway +++ style model. Following the heightened level of chaos displayed yesterday, which saw sterling fall to multi month lows against both the dollar and euro, there looks to be an increasing chance that a second referendum is called as one route through this process. Note that this is not likely to be possible within the current Brexit timescales and would like require delay of the UK’s exit point beyond March 2019 via an Article 50 extension.  Finally, Labour leader Jeremy Corbyn is facing increased calls to press for a no confidence motion in the Government whilst there is continued talk of PM May facing a leadership challenge as leader of the Tory party.