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Bill to ban employers from using tips for workers’ pay

Bill to ban employers from using tips for workers’ pay

The Government is preparing legislation that would ban employers in the service industry from using tips to help pay workers’ wages and require businesses to display their policies on tipping.

It follows criticism of some businesses that were not allowing staff to take home the full amount of tips they had received during a shift.

Minister for Employment and Social Protection Regina Doherty said Ireland has a problem with ownership of tips that must be addressed.

She said: “The vast majority of employers are very good and recognise that a tip is a gift between the patron of the restaurant or hotel and the person that is giving them the service.

“But there are a small number of employers who seem to think that it’s okay to take those tips and use them as part of wages for the employees or keep them for themselves.

“There has been a clear message sent out by every member of the Dáil and Seanad today is that is not on.”

James Larkin from Mullingar says he worked in three different restaurants and his tips were deducted in different ways.

He said: “A common occurrence was for 10% of your tips to be taken through breakages and that was whether you broke anything or not. Another way was that when you were in training none of your tips went to you.

“Other things would happen like tips would be taken if the till didn’t balance at the end of the day which is a very common experience and at the end of it all you end up with little or none of your tips.”

Meanwhile, a Sinn Féin Bill, which aims to give restaurant workers a legal right to their tips, was passed in the Seanad today.

However, the Government opposes this bill on the basis that a report earlier this year by the Low Pay Commission advised against primary legislation in this area.

The LPC said that such a change could have unintended consequences, and end up in workers receiving even lower take home pay.

Sinn Féin Senator Paul Gavan told the Seanad today that the Government’s proposals do not go far enough.

He said: “The bill that you say you are going to produce, a bill which nobody had heard of until yesterday after eight years in Government, but you say there is a bill now in the offing, but it doesn’t tackle the key legal issue to give hospitality workers a legal right to their tips and that’s what we need.”

Mr Gavan said there was a wrong being done to workers in the sector and he said the Sinn Féin bill would address this.

He said: “This bill gives hospitality workers a right to their tips. That’s at the heart of this bill and we know from research that one in three workers do not get their tips. The bill also requires restaurants to display their tipping policy.

“We believe that all workers who deliver a service and where a service charge is paid should get that fee.”

Yesterday, the chief executive of the Restaurants Association of Ireland said the organisation supports the minister’s plan.

Adrian Cummins said it was a workable solution for business owners that provides certainty for staff and transparency for customers.

Earlier this year, the RAI advised its members to display their policy on tips and gratuities.

The issue was also raised in the Dáil earlier this year when the tips policy at a restaurant in Dublin city centre was highlighted.

At the time, Tánaiste Simon Coveney warned that it was illegal to calculate workers’ salaries by including customer tips in that figure.

The Government said it expects to bring a memo to Cabinet on its proposals next week.

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Major Irish firms claim significant progress on carbon reduction target

Major Irish firms claim significant progress on carbon reduction target

A new report claims that 47 major Irish firms have already made significant progress in meeting a carbon reduction target initially set for 2030.

The pledge was made as part of the Business in the Community Ireland group – and sees the likes of Diageo, Musgraves and Ornua aim to cut their carbon intensity by 50% by 2030.

According to a report by PwC published this morning, the average cut achieved in the first year was 36%.

Carbon intensity takes a company’s size and activity into account and is not a straight measurement of pollution levels.

However Tomás Sercovich, CEO of Business in the Community Ireland, says it helps capture the progress of firms that may be enjoying rapid growth – and is a good first step for measuring their environmental impact.

“The challenge that we have ahead of us in terms of climate resilience is about decoupling economic growth from emissions,” he said. “What we really wanted to get across here was a starting point; a level of ambition, and then look at how we can reduce this going forward.”

However the report does also try to estimate the amount of actual Co2 removed from the economy by the signatories, which it says fell by 42% or around 6.6 metric tonnes.

This was done largely through a reduction in what are called Scope 1 emissions, which relate to a firm’s direct output through things like manufacturing and transportation.

“I know it’s a hard to grasp content in terms of what that means, but they are actual reductions, and at the end of the day it’s about a starting point and looking at where we go for further reductions,” Mr Sercovich said.

One issue with that data is the fact that around one third of firms did not get their figures independently verified – meaning that it needs to be taken with a pinch of salt.

Mr Sercovich said this shows how under-developed the practice is in Ireland, and highlights the need for improved auditing as firms strive to improve their record.

“It is something that we need to put more rigour and discipline around what companies are doing in this space,” he said. “What we have done is used internationally validated sources for the information to be processed… we have checked the data ourselves and obviously in some cases asked if it was verified.

“We would like to see more verification externally, of course.”

Should the figures prove to be accurate, however, it would represent a significant step towards the 2030 target in the space of a year.

Mr Sercovich said this will prompt them to be more ambitious than before – though he also notes that the next reduction in Co2 may not come as easily.

“36% out of 50% sounds like ‘almost there’ but the real challenge will be sustaining those intensity reductions, in terms of the investments that need to be done, in terms of the transformation of business models that are needed,” he said. “The last mile will be the most challenging one.

“What we need to do is keep on raising the level of ambition – this is like the Paris agreement – we are going to be working on how we can achieve the 50% reduction earlier, or how we can go even deeper, or look at other sources of emissions.”

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Ireland will be worst-hit by US tariffs, says IMF

Ireland will be worst-hit by US tariffs, says IMF

The Irish economy will be hit three times harder than Germany and worse than any other developed nation if the US imposes a blanket trade tariff, the IMF has warned.

A new study from the International Monetary Fund (IMF) put Ireland top of a list of countries that will be worst hit by US tariffs.

The study models the impact of a potential 5pc tariff imposed across the board by the US. It was released yesterday amid a series of trade disputes that have pitted the United States against China and against some of Washington’s closest allies, including the EU.

Ireland’s goods exports, it calculates, would fall by more than 0.6pc.

That’s more than three times the drop experienced by Germany, which is the target of Donald Trump’s threat to impose tariffs “until no Mercedes models rolled on Fifth Avenue in New York” as part of his bid to get more of the products sold in the US built there by American workers.

Based on last year’s exports from here to the US that figure is equal to lost exports of €234m.

In May, a report by the Commerce Department stated that imports of foreign-made cars were “weakening our internal economy” in a way that was damaging the economic security of the United States, highlighting a drop in the share of the car market held by US owned companies to just 22pc now from 67pc in 1985.

President Trump has delayed bringing in the tariffs on car imports for six months in order to give the EU, Japan and other major exporters a chance to negotiate on the issue.

The EU is the most export-exposed bloc of any of the world’s major economies and Brussels has said it will respond to any US tariffs with levies on imports of US goods.

“About 70pc of European exports are linked to supply chains. Therefore, shocks affecting existing trade flows between the major trade hubs – the United States, China, and Germany – could affect European economies through those supply chains,” the IMF report said.

Ireland’s exposure to the car industry is tiny but the State’s exports to the US are huge. The Irish Whiskey Association, for example, has already warned of the potential for damage to the industry here from tariff escalations. Ireland is a key part of the global supply chains that now criss-cross the world, with manufacturers here shipping goods globally, such as semiconductors or pharmaceuticals.

Some 28pc of the €140bn of goods exported each year go the US, but medical and pharmaceuticals, whose output is dominated by US companies, accounted for a third of all exports.

As well as accounting for a huge chunk of exports, multinational firms accounted for 77pc of the €10.4bn in company taxes paid last year.

Washington has already signalled its displeasure with Ireland over trade, adding it to a list of countries that are on a currency manipulation watch – which means they believe that the country has deliberately engineered a weak currency against the dollar so as to win market share.

Germany and Italy were also on the list among countries that use the euro. Most economists agree that the exchange rate at which Germany joined the euro was too low and say that it has given German exporters a huge advantage.

The apparent peace between Washington and Brussels on trade just now is down to a truce struck last year by Jean-Claude Juncker in a meeting with Mr Trump.

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3.3% rise in goods handled – in and out – of Irish ports

3.3% rise in goods handled – in and out – of Irish ports

New figures from the Central Statistics Office reveal that Irish ports handled 55.1 million tonnes of goods last year, an increase of 3.3% on the previous year.

Total goods forwarded from Irish ports amounted to 18 million tonnes, a slight increase of 0.8% when compared with the previous year.

A total of 37.1 million tonnes of goods were received in 2018, an annual increase of 4.5%.

The CSO noted that Dublin port accounted for 59.3% of all vessel arrivals in Irish ports and 47.8% of the total tonnage of goods handled in 2018.

The routes between Dublin and three UK ports – Holyhead, Liverpool and Milford Haven were the busiest routes for inward movement of goods last year.

The Dublin-Holyhead and Dublin-Liverpool routes were also the busiest routes in terms of goods forwarded, the CSO said.

It also said the number of vessels arriving in Irish ports increased by 3.4% to 13,264 in 2018, while the gross tonnage of these vessels rose by 8.8% to 264.4 million tonnes.

Today’s data is compiled from returns made by harbour authorities, state companies and a number of other harbours.

These ports include Drogheda, Dublin, Dundalk, Dun Laoghaire, Galway, New Ross, Cork, Waterford, Shannon Foynes and Wicklow – which are all state companies.

Also included are harbour authorities at Arklow, Bantry Bay, Kilrush, Kinsale, Sligo, Tralee and Fenit and Youghal. Ports at Castletownbere, Greenore, Killybegs and Rosslare Europort also feature in the CSO figures.

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Fiscal Council issues warning over Government’s budget plans

Fiscal Council issues warning over Government’s budget plans

The Government will have just €600 million to either increase spending or reduce taxes in October’s budget once existing commitments are taken into account, the State’s independent finance watchdog says.

According to the Irish Fiscal Advisory Council (IFAC), if the Government sticks to its plans, a total of €2.8bn in additional measures could be included in the budget, although €2.2bn of those are already accounted for.

IFAC chairman Seamus Coffey said public finances are experiencing a temporary surge in growth as the economy recovers from the financial crash and this is combined with an unexpected surge in corporation tax revenue.

He warned, however, that Ireland has one of the highest reliances on corporation tax across the OECD and there is a potential for this to evaporate and “cause a hole to open up in the public finances”.

Speaking on RTÉ’s Morning Ireland, Mr Coffey said if this was to coincide with another external risk, such as Brexit, it could result in increased taxes and reduced spending.

He said there were currently significant over runs in health and there appear to be problems in estimating the cost of large capital projects.

He added that the budget constraints are not been adhered to and these unplanned increases are also leaving the country unnecessarily vulnerable to the inevitable downturn and external shocks that the country faces.

Following the warning from the IFAC Chairperson, Fianna Fáil’s spokesperson on Finance Michael McGrath said the criticism of the Government’s medium-term spending plans was stinging, adding that one does not need to be clairvoyant to see the Government’s forecasts were not credible.

“They’re not based on a realistic assessment of the real needs of the economy and public services,” Mr McGrath told RTÉ’s Morning Ireland.

Asked whether Fianna Fáil should intervene more if they were really concerned, Mr McGrath said they were doing that, and that they were holding the government to account.

He added that Fianna Fáil have repeatedly asked for longer budget forecasts from the minister, as they have not seen forecasts for the next 10-15 years.

In its latest Fiscal Assessment Report published this morning, IFAC says that while it is now operating near capacity, the outlook facing the economy is unusually uncertain.

It says Government forecasts, which are based on an orderly Brexit, are balanced between potential overheating on one side and an “exceptional adverse shock” from a harder than assumed UK exit from the EU on the other.

It also points to possible changes to international tax arrangements, as well as increased protectionism, downturns in the economies of Ireland’s trading partners and other potential adverse financial developments.

IFAC says Ireland’s net debt ratio remains the fifth highest in the OECD, making our creditworthiness vulnerable to rapid changes, and it claims little progress has been made on this issue since 2015.

In fact, data suggests the structural budgetary position has worsened in recent years, IFAC claims, because although the economy has been performing strongly and corporation tax receipts have been increasing, the budget balance has not improved in the last four years.

In this regard the council points the finger in part at the Government for allowing spending to drift in recent years, with expenditure growth rising from 4.5% in 2015 to 6.7% last year.

This led, IFAC says, to net spending last year breaching rules put in place after the financial crisis, that aim to keep expenditure under control.

It also levels heavy criticism at the Government’s medium-term spending plans from 2021 onwards, saying they are not credible as the spending forecasts that underpin the budgetary projections are not accurate.

“The Government’s Medium-Term Expenditure Framework is not working,” the report states.

“Repeated, procyclical revisions to expenditure ceilings look set to continue. This risks repeating the mistakes of the past, with revisions to expenditure ceilings now of a similar magnitude to those immediately prior to the crisis.”

The body warns corporation tax levels are now “a long way from conventional levels and from what the underlying performance of the economy would imply.”

In fact, it says, between €3 billion and €6 billion of the €10.4 billion of tax taken in by companies last year could be considered beyond what would be projected for an economy performing like Ireland’s is right now.

As a result, it cautions that while these benefits could last for several years, reversals could also be expected, unlike other revenue windfalls.

It also says the Government needs to make a “credible commitment” to not use corporation tax revenue for spending increases that last for the long term.

It suggests a way of mitigating against the risk would be to set up a so-called “Prudence Account”, into which extra revenue above that which was forecast from corporation tax during each fiscal year would be set aside.

That money could then be put into the rainy-day fund, or given to the National Treasury Management Agency to reduce debt at the end of the year, it claims.

On Brexit, the IFAC warns that a disorderly exit of the UK from the EU poses “profound risks” to the public finances and could lead to increases in the state’s debt ratio.

In such an event, it says, the Government might be forced to reduce spending or hike taxes to stop an indefinite spike in the debt ratio caused by an opening up of a budgetary deficit.

Overall the council says the Government should keep to its existing plans for this year as sketched out in the economic forecasts published in the Stability Programme Update 2019 in April.

In particular, it cautions that the Government should not get involved in increasing spending during the remainder of the year, unless it takes steps to cut expenditure elsewhere or increase revenue.

It says the Government’s plans for 2019 indicated that the fiscal position would grow along the same trajectory as the potential of the economy and inflation.

But it says last year the Government went further than expected, allowing spending to rise by €1.3 billion, over and above the €3.2 billion that had been originally planned for.

Much of that extra outlay went on health due to further overruns in its budget, extra spending that IFAC had previously been critical of.

The council says extra spending and tax measures announced in Budget 2019 were a further €300 million above what had been anticipated.

It says all these rises have contributed to a faster-than-planned pace of expansion and possible overheating of the Irish economy.

Next year, the organisation says, budgetary caution must be exercised by the Government given the risks posed by Brexit, corporation tax, potential overheating and the faster than planned growth in spending in recent years.

It says if the Government sticks to its plans, €2.8 billion in additional measures could be included in the budget.

However, it says that when pre-existing commitments such as increases in public investment, public sector pay, provision to cater for demographic changes and for assumed tax cuts are taken out of this total, the actual amount available to the Minister for Finance will be around €600 million.

As a result, only minimal new tax and spending measures will be possible on budget day, with any further spending or tax cuts funded from additional revenue-raising measures.

It adds that it would be better though if not all that €2.8 billion fiscal space was used, given the potential challenges facing the economy.

Revenue estimates that a 1% reduction in the higher 40% rate of income tax would cost €340 million.

Reacting to the report, Fianna Fáil spokesperson on Public Expenditure and Reform Barry Cowen said it is critical that the warnings and conclusions from IFAC are taken on board by the Government.

“Despite what the Government want us to believe the country is sailing very close to the wind when it comes to the State’s finances,” he said.

“There is a serious lack of credibility when it comes to expenditure ceilings as they are almost always ignored.”

“The €645 million in supplementary funding in the Department of Health last year and the overspending on capital projects such as the Children’s Hospital and the National Broadband Plan is having a direct impact on Ireland’s fiscal position, which means there is very little room for manoeuvre in the years ahead.”

“Fine Gael claims that it can be trusted with the State’s finances but when all is said and done this is a complete fallacy and this report backs that up.”

However, in a statement ahead of the report’s publication, the Department of Finance said the European Commission, as gatekeeper for the fiscal rules, assessed the Irish budgets to be compliant with the fiscal rules.

It also said IFAC had endorsed its forecasts.

The department also said the Minister would publish a report shortly outlining how reliance on corporation tax can be reduced.

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Average annual earnings rise by 3.3% to €38,871 in 2018

Average annual earnings rise by 3.3% to €38,871 in 2018

Average annual earnings increased by 3.3% to €38,871 in 2018 from €37,637 in 2017, new figures from the Central Statistics Office show.

The CSO said this compares to an annual increase of 1.9% in 2017 from €36,933 in 2016.

Today’s figures show that average annual earnings for full-time employees last year rose by 2.6% to €47,596 while the average for part-time employees were €17,651 – an increase of 3.5% on 2017.

Average annual earnings have recovered since the downturn, rising by 8.1% from €35,951 in 2013 to €38,871 in 2018.

Average annual earnings for full-time employees were up 6.5% in the five-year period from €44,709 in 2013, to €47,596 in 2018.

And average annual earnings for part-time employees increased from €15,802 in 2013, to €17,651 in 2018, an increase of 11.7%.

Meanwhile, total earnings rose to €71.5 billion in 2018, an increase of 7.4% on 2017.

The CSO said the increase was driven by a rise in the average numbers employed of 4%, a 2.8% increase in average hourly earnings and a 0.4% increase in average weekly hours worked.

The largest percentage increase in wages last year was seen in information and communication sector where average annual earnings rose from €56,758 to €61,269 – an increase of 7.9%.

Average annual earnings in the construction sector rose by 5.7%, rising from €38,391 to €40,561.

But the public administration and defence sector recorded the lowest average annual earnings growth of 1.7% in the year, with wages increasing from €48,907 to €49,724.

Today’s figures also reveal that the total cost of employing labour increased by 7.1% in 2018 with total annual labour costs reaching €82.7 billion.

Total annual labour costs have increased each year between 2013 and 2018, the CSO added.

The industry sector had the highest total annual labour costs of €12.7 billion in 2018 followed by the wholesale and retail trade sector (€10.6 billion) and the human health and social work sector (€10 billion).

The administrative and support services sector and the Arts, entertainment, recreation and other services activities sector had the lowest total annual labour costs of €3.5 billion and €1.6 billion respectively.

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Sterling bounces off five-month low against the euro after April pay data

Sterling bounces off five-month low against the euro after April pay data

Sterling pulled away from five-month lows against the euro today after UK wages in the three months to April rose faster than expected.

The pound has been on the backfoot in recent weeks as investors sit on the sidelines while the contest to succeed Theresa May as leader of the Conservative party and country heats up.

Worse than expected data yesterday which showed that the British economy shrank by 0.4% in April added to the pound’s worries.

But sterling found some relief after wage growth in the three months to April came in at 3.1%, exceeding a forecast by a Reuters poll of economists for 3%.

UK employment growth slowed but the jobless rate held at its lowest since 1975, the official figures showed.

Wage growth is outstripping inflation and the Bank of England has said it will need to raise interest rates – probably faster than the market expects – to keep inflation close to its 2% target.

The pound recovered from five-month lows against the euro of 89.325 pence, hit earlier in the session and rose 0.2% to 89.02 pence.

Against the dollar, the British currency rose 0.2% to $1.2711 from around $1.2694 before the data.

Investors have largely ignored economic data releases in Britain recently, believing the Bank of England is unlikely to act until Britain decides how, when and even if it will leave the European Union.

The UK is scheduled to exit the bloc on October 31.

David Cheetham, an analyst at online broker XTB, said the UK economy looked to be far from thriving but given the “dual headwinds of ongoing political uncertainty and a slowing global economy” current levels of activity were about as good as could be expected.

Analysts at Danske Bank said softer UK data in recent weeks, including the GDP numbers, suggested “the economy is likely to see a minor deterioration in fundamentals, which is set to weigh on sterling.”

Investors are concerned the next British prime minister could put the country on course for a no-deal Brexit after Theresa May failed to get her withdrawal agreement through parliament.

Eurosceptic Boris Johnson is the bookmakers’ favourite to win the contest.

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Hoteliers call for urgent action on ‘unsustainable’ insurance costs

Hoteliers call for urgent action on ‘unsustainable’ insurance costs

62% of hoteliers have seen further increases in their insurance costs over the last 12 months, according to the Irish Hotels Federation.

The Irish Hotels Federation said its research shows the average increase in premiums was 28%, with the latest hike coming after substantial increases in recent years.

It also said that about 90% of hotels and guesthouses say they are concerned about the impact of insurance costs on their business.

IHF President Michael Lennon said the increases are unsustainable.

“Exorbitant insurance costs are curtailing the ability of hotels and guesthouses to re-invest in their businesses with knock-on effects for the tourism industry,” Mr Lennon said.

The IHF said it wants urgent action by the Government to address the spiralling cost of insurance.

“We need decisive action by Government to tackle insurance costs, particularly in relation to the handling of personal injury cases in Ireland and the excessive levels of awards being made which are four to five times higher than in the UK,” Mr Lennon said.

He also urged the Government to give greater urgency to setting up the Judicial Council to review levels of awards for personal injuries.

He said that a zero tolerance approach to fraud is required in order to create an effective deterrent against exaggerated or misleading claims.

“It is vital that a dedicated Garda resource is created specifically tasked with investigating fraudulent cases for potential prosecution,” the IHF President stated.

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Construction activity growth eases to four-month low in May

Construction activity growth eases to four-month low in May

Activity in the construction sector eased to a four month low in May, according to the latest Purchasing Managers’ Index from Ulster Bank.

The Ulster Bank Construction PMI fell to 54.9 in May, down from a reading of 56.6 in April.

But despite the slowdown, the construction industry has marked more than five and a half years of continual expansion.

Ulster Bank said the housing sub-category recorded the fastest rise in activity of the three monitored sub-sectors for the fifth month in a row during May.

Commercial activity also increased, but at the slowest pace since August 2013.

Meanwhile, civil engineering activity declined for the ninth consecutive month, with the rate of contraction quickening slightly from April.

Ulster Bank also said that despite expanding at the slowest pace since December 2018, the rise in
new business was the 71st in as many months.

Construction companies told Ulster Bank that increased market activity and the starting of new projects were the main factors behind the expansion in new work last month.

And employment across the construction sector increased for the 69th successive month in May. But Ulster Bank noted that despite the solid growth, the rate of job creation eased from April to the slowest since March 2015.

Meanwhile, the rate of input cost inflation eased in May to the slowest since September 2016.

Simon Barry, chief economist at Ulster Bank, said that Irish construction firms continued to experience solid, though slower, growth in May.

“Very encouragingly, the residential sector remains a particular bright spot with housing activity continuing to expand sharply last month,” Mr Barry said.

“Commercial activity also very much remains in expansion mode, but the commercial PMI has now fallen for three months in a row, with the May reading marking the slowest pace of growth in nearly six years,” he added.

He noted that new business and employment levels continued to rise at healthy rates in May, albeit in line with overall trends, both indices eased last month.

He said this was particularly evident in the case of employment, with the rate of job creation dropping to its slowest pace in over four years.

But he added that this is best seen as a retreat from very elevated readings in recent months.

“Survey respondents remain optimistic about the sector’s prospects over the year ahead, with expectations of stronger customer demand cited as an important source of support,” the economist added.

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New car sales slow again in May – CSO

New car sales slow again in May – CSO

The number of new private cars licensed for the first time fell again in May as imports continued to rise, new figures from the Central Statistics Office show.

A total of 9,126 new private cars were licensed in May, down 2.5% from the 9,362 registered the same time last year.

Meanwhile, the number of used, or imported, cars licensed increased by 2.7% in May to 9,062 as a weaker sterling continues to make it more attractive to buy and import vehicles from the UK.

The CSO also said there was a 1% decrease in the number of new goods vehicles licensed in May, bringing the total to 2,514.

In the first five months of 2019, a total of 73,781 new private cars were licensed, down 7% compared with the same period last year.

And the number of used private cars licensed increased by 3.5% compared with the same time in 2018.

Figures last month from the CSO had shown that new car sales rose by 19.4% in April compared to the same time last year, with the increase mainly due to the timing of Easter.

Today’s CSO figures also show that Volkswagen was the most popular make of new private car licensed in May. It was followed by Toyota, Renault, Opel and Ford.

The CSO said that together these five makes represent 45% of all new private cars licensed in May.

The CSO also noted that in the first five months of this year, 47.5% of all new private cars licensed were diesel, compared with 55.5% the same time last year.

When it comes to buying cars, licensing and registration are different processes. A vehicle is licensed when a valid motor tax disc is issued for the first time whereas registration occurs when a vehicle gets its licence plate (registration number) for the first time.

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