Steak No More in Yeats Country Depicting Scant Recovery: Economy

Steak No More in Yeats Country Depicting Scant Recovery: Economy

On Ireland’s emptiest major shopping street, butcher Keith Clarke is mourning a loss of business. “The fillet steak died a death,” said Clarke, 57, who runs a store on Grattan Street in the town of Sligo on the country’s west coast. His sales have dropped 40 percent since the economy imploded in 2008 and have further to fall, he said. “They’re buying the cheapest cuts now.”Set against the backdrop of Benbulben mountain, which helped inspire the Nobel-Prize winning poet William Butler Yeats, Sligo illustrates the two-speed nature of Ireland’s recovery and the challenges facing the government as it prepares to exit the bailout the state entered three years ago. Taxpayers face another potential 3.1 billion euros ($4.2 billion) in spending cuts and tax rises in the 2014 budget next week.

While signs of revival are emerging in Dublin, elsewhere the economy remains moribund. One in four stores around Sligo’s Grattan Street lie empty, rendering it the thoroughfare with the highest vacancy rate among those analyzed by real estate firm CBRE Group Inc. (CBG) With consumer spending still falling, the central bank lowered its growth forecast for this year and 2014.

“Retail spending remains subdued,” said Alan McQuaid, an economist at Merrion Capital in Dublin. “Things aren’t going to get dramatically better until the labour market improves and disposable income increases.”

Yeats Hangover

Irish retail sales have fallen in three of the last four years, as taxes rose, unemployment tripled and mortgage arrears surged following the worst real estate crash in Western Europe. Consumer spending, which accounts for about half of the economy, has fallen for the last two years, and will drop 0.4 percent this year, the central bank said last week.

The legacy of the crash is more apparent outside Dublin, European home to companies Google Inc. (GOOG) and Facebook Inc. Sligo, which brands itself Yeats Country because the poet spent summers in the area, is suffering more, and butcher Clarke reckons it will get worse with next week’s budget.

“It’s going to drive sales further down, I have no doubt,” Clarke said. “If they have to pay extra taxes on fuel and God knows what else might come in, they’re just not going to have the money to meet everything.”

Regions outside Dublin had a greater reliance on the building industry before the recession and attract less foreign investment than the capital, according to Dermot O’Leary, an economist at Goodbody Stockbrokers. Instead, areas such as Sligo are trying to draw tourists, playing on the windswept landscape, lakes and Atlantic Coast beaches which helped inspire Yeats.

“Those regions are suffering a bigger hangover from the construction collapse because they had a bigger party,” said O’Leary. “Labour markets are weaker, consumer spending is weaker. They’re still feeling the effects of the downturn.”

Years Behind

Unemployment in Dublin, which accounts for about two-fifths of the economy, was 12 percent at the end of June, compared with almost 14 percent in the west of the country.

Nationally, the jobless rate, as measured by the Live Register, fell to 13.3 percent in September from a peak of 15 percent in February 2012. Irish consumers are more confident now than they’ve been in six years, KBC Bank Ireland and the Economic and Social Research Institute said in a report published last week.

Back in Sligo, it’s hard to see signs of revival. DNG Flanagan Ford, for example, dropped the annual rent on a former bagel store 70 percent to 12,000 euros a year to try and find a tenant for the vacant unit.

“If something happens in Dublin, it’ll be a number of years before it happens down here,” said Walter Murphy, an auctioneer for 30 years in Sligo, about 200 kilometers (124 miles) and a three-hour drive from the capital. “That’ll always be the case.”

No Kebabs

Murphy, wearing a tie with black and white stripes that matched the Sligo flag, said he sold land for about 12,000 Irish punts (15,239 euros) per acre in 1994. An investor bought a nearby site for about 1 million euros per acre 10 years later.

A similar site would sell for between 50,000 euros and 80,000 euros per acre today, Murphy said. Prices in Sligo have at least “plateaued,” he said.

Empty retail units close to Murphy include a kebab store, a former camera store and a 24,000 square-foot office unit that used to house the state-owned Electricity Supply Board. A restaurant near Grattan Street shut last week.

In Dublin, retailers on the main Grafton Street shopping thoroughfare including Hennes & Mauritz AB (HMB) and Abercrombie & Fitch Co. are expanding as shoppers return.

Clarke, the butcher who has worked on Grattan Street in Sligo for 43 years, said his customers are still swapping fillet steak for minced and diced beef.

“We’ve very limited industry in Sligo,” he said. “There’s nothing to generate jobs.”

To contact the reporter on this story: Donal Griffin in Dublin at dgriffin10@bloomberg.net

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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