EU introducing a comprehensive 'innovation strategy from research to retail'

The announcement by the EU towards creating an 'innovation union' is well worth reading. The importance of the strategy is put into context in the annex of key statistics - worth mentioning here - and indicating that this is serious business for the EU in the coming years - and will impact and benefit businesses across the EU including Ireland;


Key statistics (extract from the EU press release)

• Achieving our target of investing 3% of EU GDP in Research and & Development by 2020 could create 3.7 million jobs and increase annual GDP by up to €795 billion by 2025 (Source: P. Zagamé, L. Soete (2010) The cost of a non-innovative Europe)
• The EU will need at least 1 million new research jobs if it is to reach the R&D target of 3%. More researchers are needed primarily in the business sector (Source: European Commission (RTD-Eurostat)
• Business R&D in the EU is 66% lower than the US and 122% lower than Japan, as a share of GDP (Eurostat)
• In 2008, EU-27 accounted for 24% of the total world R&D expenditure against 33% for the USA, 12% for Japan and 11% for China (Source: STC Key Figures Report 2010/2011; primary data sources: Eurostat, OECD, DG ECFIN)
• In real terms, R&D expenditure has increased by about 50% in the EU and 60% in the USA since 1995 but it has more than tripled in Asia-5 (China, Japan, South-Korea, Singapore, Taiwan). (Source: STC Key Figures Report 2010/2011; primary data sources: Eurostat, OECD, UNESCO)
• Private firms investment in R&D should be in 2020 at least €150 billion more than in 2008 for EU to reach the Europe 2020 target of investing 3% of GDP in Research and & Development. Source: European Commission (RTD-Eurostat; primary source: Member States preliminary R&D intensity targets) 
• In 2009, EU-27 produced 29% of the scientific publications in the world, the USA 22%, Japan 5% and China 17%. Of the top-10% most cited scientific publications (2007), EU-27 produced 32%, the USA 34%, Japan 4% and China 9%. (Source: STC Key Figures Report 2010/2011; primary data sources: Science-Metrix/Scopus (Elsevier)
• In 2007 both the EU and USA represented 31% each of patent inventions filed under the Patent Cooperation Treaty (PCT). By 2020, the situation is forecast to be approximately: EU: 18%; US 15% and 55% for Asia-5 (China, Japan, South-Korea, Singapore, Taiwan). (Source: STC Key Figures Report 2010/2011; primary data source: WIPO, OECD)
• An SME must disburse €192.000 of legal fees to obtain and maintain a patent protection for all 27 EU Member States. It would cost only €4.400 for a protection of the same duration in the USA. (Source: European Patent Office (EPO) and EU National patent offices, US Patent and Trademark Office (USPTO)
• Venture capital funds in Europe are at a quarter of the level in the US ((2008 data from EVCA/ Eurostat
• To date, contributions for the Risk Sharing Facility Fund of €430 million from the EU budget and €800 million from the European Investment Bank, as risk-sharing partners, have supported over € 18 billion investments (15 times the combined contribution to the RSFF and 42 times the EU budget contribution). The €400 million contribution to the CIP financial instruments up to the end of 2009 has leveraged investments of €9 billion (22 times the budget contribution), benefiting some 68000 SMEs. (Source: EIF report to the European Commission on CIPhttp://ec.europa.eu/cip/eip/access-finance/index_en.htm)
• The EU's Seventh Framework Programme for Research is the largest in the world with a budget of more than €50.5 billion, excluding Euratom, for 2007-2013.
• According to the Eurobarometer on Science and Technology (June 2010), 66% of Europeans think that science and technology make our lives healthier, easier and more comfortable.

Irish Government Naivety in 15 billion-euro ($21 billion) Spending Cuts

In a sign that Brian Cowen might have had one drink too many, the Irish government has announced swinging cuts to reduce Irelands deficit by 15 billion-euro ($21 billion) over the next four years. This by way of cuts in spending and tax increases. The government are reported to be looking to ever desparate measures in a bid to avoid the more logical solution to ease Ireland's economic woes - leaving the Euro.

Ireland’s budget shortfall in 2010 will be about 32 percent of GDP with around 20% of that resulting from the banking bail out. Recent reports in the media about abuse of Ireland's corporate tax regime (Google pays tax on just 1% of its non-US revenues through its Irish subsidiary) serve to underline that the Irish Government is focused on pleasing everyone except the Irish population. It is increasingly difficult to ignore the inability of the Irish Government to manage even basic aspects of the economy. The country clearly needs a new government - and one that reflects true business acumen.

Logic would suggest that the size of the civil service should be cut in half. Whilst it is a well known fact that it takes four council workers in Ireland to dig a hole - one digging and three supervising- the same applies to the broader civil service. The country could probably survive a 70% cut in numbers. However, rather than follow logic, the government are now reported to be considering using the country's 24 billion euro ($33 billion) state pension fund to buy Government bonds. The politics of desparation! To sustain such a move would likely require civil servant numbers to be maintained or even increased. SO the government would in effect be buying its own bonds. Such a move will worsen Ireland's credit rating resulting in increased borrowing costs - and prolong any possibility of economic recovery.

With such substantial cuts and tax increases on the way, emigration figures will surge hugely in coming years leaving a shrinking population to face the burden of an ever increasing debt.

Beware: Britains Bribery Act will have major implications for London-listed Irish companies

A well rounded article in the Irish Independent draws attention to the dangers ahead for London-listed Irish companies which include well known names like Tullow Oil, Kenmare Resources, Petroneft, Petroceltic and Petrel, and Glanbia (no evidence of wrongdoing against any of these).

Britains Bribery Act is due to come into force in April 2011 - giving little time for London-listed Irish companies to move to other exchanges. The Act carries a  new corporate offence of "failing to prevent bribery" whereby a  company can be liable where it fails to stop a bribe by an "associated person". The doors is wide open and includes employees agents, partners, intermediaries or subsidiaries. So if you want to ***k your competitor, get the cash out and hand it out with a few of your competitors business cards. Task done, tip off the authorities and sit back and relax.That'll do nicely. Then go in behind and do things the right way to pick up the vacated business opportunity.

How ridiculous business has become. WTO, EU, the US and more - all looking for ways to stymie business under the guise of opening up markets. How to make a payment under the desk, how to determine whether its necessary to oil the wheels and how to share rewards is as much fun and part of the game as is signing the contract.

Will it work? No. It will create more middle men and ultimately it will push up the cost of doing business. Instead of one well placed payment, everything will have to be in the open. More use of ‘advisers’ tax on any payment will have to be factored in making the payments higher. Because it will all be in the open we will increasingly see that more will want more. An Irish company doing business in developing countries will likely end up having to pay the president’s brothers because they see that their cousins are being employed as consultants or advisors. Then the president will also have to be paid because all his family are getting rich – and he costs more.

Some things are best left alone and the business success of Irish companies in difficult economies is not always down to history – but rather can sometimes be down to how well you know your friends and how to ensure they look after your interests alone. I expect we’ll see more Irish businesses avoiding London listings in years to come.

But all this is pure speculation, of course. It’s the luck of the Irish that wins the deals, as we all know!

Bank of Ireland uses bail out funds to stick two fingers at the Irish constitution

In a move that will delight Unionists and any survivers of the Irish Farmers Party, Bank of Ireland has announced it has created a UK wholly owned subsidiary into which it will transfer its business in the north of Ireland. Surely this is constitutionally questionable - particularly that the bank has been bailed out with public funds.

So we seem to be going backwards. Integration of the whole of Ireland is a cornerstone of the Irish constitution. For an Irish businesses, particluarly one with a government stake, to separate its business in the north and put it into a UK subsidiary is unbelievable and will turn many a patroit in his grave.

It is understandable to create a British subsidiary to encompass those parts of Bank of Ireland that reside and operate in Britain. But Ireland is Ireland and any business in Ireland should remain as part and parcel of the Irish business operation. Does the peace process mean that we are all afraid now to voice any concern about anything?

The Irish are drinking and smoking less, as austerity measures bite - much to the chagrin of the tabacco companies and SOFT drinks manufacturers

No, the headline is not wrong. The Irish are drinking less than they did before. But it's not the Guinness that's suffering. No, the black stuff is still flowing. Its the soft drinks industry that's suffering.

Britvic, who produce Ballygowan, Club soft drinks, Pepsi and other brands for the Irish market is feeling the pinch. Sales are down across the board by nearly 9% on the past year resulting in a significant drop in profits. The company is planning to reduce its 800 strong workforce by 160 as a result.

Meanwhile cigerette smoking is following Britvic in the market. PJ Carroll reports a 60% reduction in profits on a market reported to consists 4.5 billion cigerettes in the year - down from 5.1bn. That seems like an awful lot of cigerettes for the size of the populations - yet the company believes there is an additional substantial grey or black market.

Rumours abound that the government is handing our cigerettes to farmers for their cattle and pigs on the back of EU subsidies. Scientists report that the incidence of tabacco adiction in farm animals in Ireland is increasing.

It used to be an issue with pigs feeding on cigerette butts (improves their digestion and reduces greenhouse gases) but now more and more animals are chewing tabacco and there are signs of major increase in mouth cancer in cows and pigs in particular.

Now where did I leave my bottle of Jemesons? I could have sworn I saw my great grandmother , Mary, passing the window just now - and I'm on the fourth floor!

Debenhams in Ireland - over the odds pricing strategy pays off, Irish shoppers pay the bills

Like several other British retailers in Ireland, the strategy of overcharging for goods (well above like for like pricing in the UK stores) is paying dividends - literally. As one might expect in tough times, overall revenues for Debenhams have fallen €10m in the past year. But for all of you Debenhams Irish shoppers out there, you will be more than happy to learn that your willingness to pay substantially higher prices than shoppers in Debenhams British stores, the company is in fine mettle overall.

Debenhams reports that headline pre-tax profit in their Irish stores in the year to end August 2010 jumped almost 21pc to £151m. Net debt was reduced, from £517m to £73.5m. According to the company, the figures represent an increase in headline profit before tax of more than 20pc on a one-year basis and 37pc on a two year basis.

No wonder that Ireland was recently recognised as being one of the most generous charitable givers per head of population in the world. But surely it's time to rein in the ropes. Demanding fair and equitable prices by ALL British retailers in Ireland should become a priority. Who's going to make the first move?

It's off to Dunnes for me. More later!

'Destigmatised' feminism coming to a village near you!! The Irish Revolution V2.0

It's prime time for 'Cork Feminista', 'Belfast Feminist Network ' and very many more. The Irish Times reported last week on a strange phenomena sweeping Ireland. And it’s not written any date near the 1^st April!  

An escape from the traditional dirty, unfashionable feminist agenda tainted by populist caricature of man-hating, bra-burning and regulation hairiness. Feminist activism hits the streets to fight - with hordes of angry, impassioned young women who are planning to have a book club, a film club, a discussion group and ‘feminism in the pub'.

Not a mention of 1916 anywhere! This is the future. An organised movement of women who want to reclaim feminism, to challenge the preconception that feminists see sex as evil and men as bad. That's good, surely?

The question, of course, is - will we see all this reflected in Irish business over the coming years. Will there be a business as well as social impact - or will it all peter out to be replaced by a destigmatised something else?

"Double Irish" and the "Dutch Sandwich" (how to p*ss off the taxman)

An insightful report by Bloomberg this week lends valuable insights on Google's tax structure, reporting the company pays just 2.4% corporate tax on its entire turnover outside the US! Obviously some lessons to be learned for all of us.

Bloomberg's report details that Google's Dublin-based operation, with a small team of 2,000, is responsible for 88 percent of the company's $12.5 billion in sales outside the U.S. That's obviously not bad on a measure of income per employee.

The really interesting part is that the company has saved $3.1 billion since 2007 and boosted last year's overall earnings by 26 percent through its tax structures.

And in a hint for those interested, the article draws reference to the final destination of Google's overseas profits. Bermuda - where there is no corporate tax.

Google pays tax on just 1% of its profits in Ireland. That's 12.5% of 1% profits on 88% of its €12.5 billion in overseas sales! (apologies to those of you who did not pay attention in maths class)

For all interested to learn how a corporate rate of 12.5% tax in Ireland equates to an overall corporate tax bill of just 2.4% - here's the route to follow.

The process is known as "Double Irish" and the "Dutch Sandwich." Which probably says all you need to know. (No, its not a description of certain intimate positions).

For clarity, in the case of Google - income from non-US clients (i.e. paying for search ads) is sent to Ireland. That starts a baton race of 'touch and go' - the money 'touches' Ireland, but does not stay (important/critical step). Next stop the Netherlands, because Ireland makes it difficult to send money direct to Bermuda.

There, the money passes through Google Netherlands Holdings - a shell company with no employees. From there, 99.8% passes on to Bermuda - and wait for it!!!!!! The Bermuda company is an Irish company! That's the 'double Irish' bit. The 'sandwich' refers to the Dutch bit in the middle.

So, the 12.5% Irish corporate tax rate may be a myth after all! Except for all those suckers who just pay up.