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Business Briefs Inflation is sword of Damocles over Irish economy

February 16, 2011

By Staff Reporter

By Harry Keaney

Inflation hangs over the booming economies of both Ireland and the United States like the sword of Damocles.

In the U.S., the Federal Reserve, with its incremental interest rate increases, is trying its best to protect Uncle Sam’s economic health. The robust Celtic Tiger, it seems, may require a similar sedative.

An increase in labor costs, a weak euro, high oil prices, higher housing costs and increases in building materials helped push the Irish inflation rate for April to 4.9 percent, the highest since 1985 and an increase of 0.3 percent on March.

Taoiseach Bertie Ahern told the Dáil that the April figure for inflation "was higher than anyone would like." However, he said the government still believed that inflationary pressures will ease in the second half of the year and that the average figure for 2000 will be around 3 percent. However, some economists and analysts believe the figure will be higher.

Since last October, inflation has more than trebled.

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The president of the Chambers of Commerce of Ireland, Tom Clarke, called on businesses to keep prices down and avoid contributing to the cost of living.

Bad share day

Saturday was a bad day for Eircom shareholders. A fall in the stock price saw the company lose 353 million euros or £277.8 million. Analysts say the weakness in Eircom’s shares is due, in part, to the fact that 35 percent stake in the company, held by KPN/Telia, is on the market and a secondary placing of these shares is expected.

Eircom is also planning to lay off up to 3,500 employees. Although this may be bad news for the people concerned, company layoffs often drive up share price as it displays a commitment to cost reduction and efficiency.

Eircom, which was floated in July 1999, is due to report its annual results this week.

E-business explosion

Ireland’s campaign to attract e-business investments has achieved "remarkable success" this year, according to Enda Connolly, the North American director of the Industrial Development Agency of Ireland. He said that e-commerce is fundamentally changing the way the way the world is doing business and "Ireland pulls out all the stops when it comes to accommodating change."

Connolly described Ireland as "the most competitive e-business location in Europe."

He pointed out that in July 1999, Global Crossing entered an agreement with the Irish government to build an undersea fiber-optic cable system linking companies in Ireland and internet users to the world. The cable will provide additional capacity and state of the art connection to Ireland’s world-class telecommunications infrastructure, he said.

The Irish government has also been deregulating its telecommunications market. For example, 30 new licenses have be been issued to companies wishing to operate in Ireland. Éircom, the former state-owned telecommunications company, has been privatized and the company’s largest cable company, Cablelink, has been sold to NTL.

"These decisions are boosting competition, driving down costs and providing choice for companies wishing to establish e-business operations in Ireland," Connolly said.

Among the companies that recently announced investments in Ireland were Dell Computers, EMC, DoubleClick, Viking Products, Hewlett-Packard, Novell Software Ireland Ltd, Oracle, America Online, 3Com, MIT MediaLab Europe, EDS Corporation, Citrix Systems, Synopsys, Siebel Systems and Syskoplan.

Boston-Ulster exchange

Boston College has announced a new exchange program with the University of Ulster in Northern Ireland for academic collaboration with an emphasis on biotechnology and other sciences. The partnership includes opportunities for undergraduate and graduate student study abroad, faculty exchanges and individual or joint faculty research projects, according to Marian St. Onge, directory of BC’s Center for International Studies.

"This is a wonderful opportunity for BC students involved in the hard sciences to study science abroad," St. Onge said. "The faculty is excited about the chance to connect with scientists at the University of Ulster and make inroads into private and public industry. It is particularly appropriate for BC to have this relationship now in light of our investment in physics, chemistry and biology."

The University of Ulster is ranked first in the United Kingdom for biomedical studies. It has state-of-the-art facilities and expertise in the biomedical-life sciences field and is involved in groundbreaking research projects, some of which will be commercialized through its new science park.

A formal agreement marking the new program was signed by Gerry McKenna, University of Ulster vice chancellor, and Boston College Academic Vice President and Dean of Faculties John J. Neuhauser in Boston College’s Burn Library on April 28.

Internet jobs

Up to 100 jobs will be created by the end of the year when Hush Communications sets up its headquarters in Dublin. The company, a worldwide provider of internet communications, will also locate its development operations in Dublin from where it will launch its HushMail Private Label next month. HushMail is, according to the company, the only fully encrypted, free web-based e-mail service available in the world.

Tying the knot

Irish venture catalyst company Gorann has signed an agreement with weddings website Weddingsonline.

WeddingsOnline, (www.weddingsonline.ie), went online on Feb. 14. The site was developed by a team of professionals, including creative director Ian Dodson and editor Kim McGuire, author of "The Irish Wedding Book."

Gorann, www.gorann.com, is an Irish venture catalyst company focused on technology companies. The company seeks to identify companies with products that have potential in the U.S. market. Gorann, the Irish word for incubate, is not a corporate finance company and does not make direct financial investments in these companies. Rather, it invests expertise and knowledge by becoming part of its clients’ management structure.

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