John Magnier

It is interesting to compare the back-slapping at European level between Brian Cowen and his contemporaries about the cutbacks in fiscal spending here and compare it to the reaction at home. There are many in the private sector who argue that the cuts in expenditure did not go far enough and that not enough has been done to eliminate public sector waste, while the public sector unions, at least, claim that they've gone too far. The response of rank and file Gardaí last week was illustrative, most of them didn't bother responding to a ballot seeking support for industrial action and the feedback from Garda sources is that there is a sense of frustration with its representative body which fell flat on its face when it presented the results last week. Perhaps there is an emerging consensus that we're all in this together. And not only that, we're in it for the long-term.

Societe Generale analyst Albert Edwards pointed out last week that even if the governments of Portugal, Spain and Greece follow Ireland's example and cut their fiscal deficits as a way of maintaining credibility with the markets "the lack of competitiveness within the eurozone needs years of relative (and probably given the outlook elsewhere, absolute) deflation". He went on say that economic prosperity "over the past decade has been a sham". In Ireland, we already know that and the policies of Bertie Ahern and Cowen assured that we will be paying for it for decades.

Tapping the equity market

Investors picking equities will need to pay careful attention to pension changes which publicly quoted companies are pushing through in the downturn. An analysis of UK pub company Mitchells & Butlers (M&B) accounts, in which John Magnier and JP McManus are investors, by Company Reporting found that the company had restricted the future pension entitlements of its employees, allowing it to immediately recognise "a £44m gain that reduces the net deficit by 25% and narrows the loss for the year to £10m". Company Reporting also found that in the financial notes the company states that pension changes have reduced its assumptions on salary increases from 5% to 2%. It is known that a number of Irish companies are using similar moves to help show a healthier financial picture but it is just a one-off boost to the bottom line. After the bloody boardroom battle at M&B, which resulted in currency speculator Joe Lewis emerging triumphant, the Irishmen will be hoping that the current review of the company ends up improving its performance at the taps.