Lessons from the month of May

Elections, sunshine and the smell of suncream – it must be an Irish summer. And while we reapply our suncream, do join us in reflecting on the month that was and what we learned in the interim.

1. Irish people are being particularly cautious with their money.

According to David Broderick of the Small Firms Association, two businesses a day in the Republic went bust last year, with small businesses accounting for 85% of “all shutdowns”. “These figures won’t plateau or decline any time soon, not with the combined impact of various policy priorities that will drive up the cost of doing business by 36% by 2026,” Broderick said at the National Economic Dialogue. He continued by saying that one could also infer from the 11,700 companies that did not engage with Revenue to repay their warehoused debt “that they too might be gone from our streets and our local business ecosystem”.

Retail sales in April were also lower than expected (dropping by 1.2% in April and was down 0.9% compared to a year ago), as consumers bought fewer cars and spent less in department stores and bars, according to the latest data from the Central Statistics Office (CSO). That said, retail sales have remained relatively strong in the context of cost-of-living pressures and higher borrowing costs. This has been linked to the strength of the labour market. So while many consumers have seen their purchasing power curtailed in recent years there are more people at work than ever before, meaning consumer spending on a cumulative basis has held up.

2. Grants available for SMEs in retail and hospitality.

Small and medium businesses in the retail and hospitality sectors are set to receive grants of up to €5,000 under a new round of the Increased Cost of Business scheme worth €66 million. The supports, which will be launched by Minister for Enterprise Peter Burke, will also increase the maximum amount available under the Energy Efficiency Grant for small businesses to €10,000.

Minister Burke is also set to announce a change to the PRSI threshold from €441 to €496 from next October. The change, costing €54 million a year, will ensure businesses with staff earning the minimum wage will pay a lower rate of employer PRSI at 8.8%.

The Restaurants Association of Ireland has welcomed the top-up in cash support, however, continues to insist that the key measure to help food-based businesses would be a VAT reduction to 9%.

3. Amazon.ie is a-go.

Three cheers for Jeffrey Bezos as online retail giant Amazon is to finally launch Amazon.ie next year. While neither date nor job postings have been pinned down just yet, it’s understood that the new venture will require a retail team in Dublin. Amazon already employs about 500 people at its fulfilment centre in Dublin, and a further 6,000 between Cork (where it has a customer service operation), Dublin and Drogheda in roles such as data engineers, operations management and finance.

The Irish iteration will allow Amazon customers based here to get their products faster and avoid additional customs charges that may have been incurred when buying from the UK or the US. (It’s understood that the multinational recently signed a five-year deal with An Post to provide convenient and fast deliveries and returns.) While this might be good news for some Irish sellers as a dedicated online store makes it easier to compete with larger brands and attract more customers both in Ireland and overseas smaller independent retailers have warned however that the new site will put them under further pressure.

4. M&As, thankfully, keep coming.

SYS Group, the Nenagh headquartered financial services group, has acquired Cork-based Global Life & Finance, which has €100 million in assets under management. The agreement is the latest in a series of four recent acquisitions by the group, bringing the overall number of people employed by the group to 58.

Global Life & Finance was founded in 2000 by its current Chief Executive, Seamus Fox, who will stay on as he moves into a senior role. The company provides financial planning, investment management and pension planning services from their headquarters in Cork City.

Lloyds Pharmacy owner PHX Ireland has completed its acquisition of McCabes Pharmacy after receiving CCPC approval, however, the terms of the deal have not been disclosed. The combined group will operate 112 pharmacies across Ireland, including the 32 McCabes pharmacies located predominantly in the greater Dublin area. Phoenix also recently acquired McKesson Europe, which owns pharmaceutical wholesaler United Drug and home nursing services provider TCP Homecare.

Watch Sharon’s interview highlights at The Real Deal 2024 where she discusses ‘The M&A Machine‘ ,and, ‘Exiting & Transitioning‘.

Irish fintech firm CR2 has been acquired by Morocco-based payments software company Hightech Payment Systems (HPS). HPS said the acquisition will enhance its digital banking and payments capabilities and accelerate its growth within the space globally.

Based in Dublin and led by CEO Fintan Byrne, CR2 has been around for more than two decades, initially focusing on the self-service banking market within the international operations of big banks such as Standard Chartered, Absa and Standard Bank. Byrne, who took over as CEO in 2017, said that the acquisition by HPS is a “recognition of what the team in CR2 have created and the opportunity within our business for future growth”.

5. Volkswagen set to sell new cars directly to Irish customers from 2026.

The Volkswagen Group is changing the game for car dealerships, as they plan to sell cars to Irish customers directly from June 2026. This means traditional dealerships will, from then, become responsible for new car handovers rather than the sales process.

VW Group Ireland will sell new vehicles directly online to customers across all its six brands; Volkswagen Passenger Cars, Skoda, Seat, Cupra, Audi and Volkswagen Commercial Vehicles. The change will end the group’s current contracts with its Irish dealers.

The Volkswagen car brand currently has 29 sales outlets in the Republic, Skoda has 27, Seat and Cupra combined have 24, Audi 11 and VW Commercials 21.

6. The business of AI is thriving.

A Google-commissioned study, conducted by Implement Consulting, has suggested that a new wave of generative artificial intelligence tools could help boost Ireland’s economy by up to €45 billion a year within 10 years. It says that the 8% additional value to Ireland’s GDP would come from additional productivity and efficiency supported by new technology, but only if such technology was adopted on a widespread basis. This reads questionably as Google has skin in the game, but generative AI is undeniably valuable to those looking to automate certain tasks.

KPMG, too, are also in on it. This month, they launched their new EU AI Hub in Dublin to support clients with optimising new AI technologies and navigating incoming regulations in the EU and globally. Located in the firm’s Platform X Global Innovation Hub in Dublin’s IFSC, the hub will redefine how AI technologies are deployed and managed for clients and sees the creation of 200 jobs in the next three years in AI and related areas including risk, regulatory services and cybersecurity.

Meanwhile, Google, Meta and Apple, as well as smaller software companies looking to make a splash, are all scrambling to bring AI agents, known as “intelligent systems,” to consumers. These will ask like Apple’s voice assistant Siri, but far more sophisticated.  For example, Google’s prototype AI assistant Astra, powered by its Gemini model, successfully identified sequences of code, suggested improvements to electrical circuit diagrams, recognised the King’s Cross area of London through the camera lens, and reminded the user where they had left their glasses.

In summary:

For some time now, we’ve derived our best entertainment from reality rather than fiction. And in a year of lackluster summer blockbusters, much of the same can be expected. Take, for example, the Fine Gael hopeful who got stitched up for a field worth fighting for, or that half of RTÉ’s bright young things fled the ship when asked to reveal their earnings outside of Montrose. Or rather that Simon Coveney, a man once revered as Leinster House’s rock of sense, is currently lobbying in the EU over smokey bacon-flavoured crisps. As your mother might say, you couldn’t script it. But as we speak, I’d wager that Black Mirror creator Charlie Brooker is doing the very same.

To our geographical right, in the UK, it’s not much better. Emergency cabinet meetings and surprise elections are becoming the norm for Downing Street, with Sunak set to hold an election the very day his daughter’s term ends, presumably permitting a near-immediate getaway (one can only assume anywhere but Rwanda) should he fail disastrously like most of his predecessors.

It seems that if Ireland and the UK were to agree upon one thing right now, it would be that the quality of our politicians needs to rise. Between the Liz Truss lettuce and questionable Dragon’s Den entrepreneurs-cum-Irish candidates returning every election year to punch down on another ethnic group, it really would leave a lot to be desired. Thank god, then, that the Irish people have someone they can rely on: the publicans who will continue to serve whatever crisps their punters ask for, regardless of whatever Coveney above in Brussels says. Not all heroes wear capes, of course – some wear black shirts, or local GAA jerseys.

See you next month!

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