The Irish Independent reports that Peter Gunn analyst at Goodbody Stockbrokers said the first half results were "well short of our forecast of €15.2m".

Furthermore sales were down 9pc on the Goodbody forecast while the operating margin of 7.3pc was behind Mr Gunn's 9.6pc expectation.

"The UK housebuilding operations continue to perform well and for the first time contribute a greater proportion of sales (€88m versus €70m) than the Irish housebuilding," Mr Gunn notes.

For the rest of the year the company expects the momentum behind the UK operations to persist, while conditions in Ireland will remain difficult.

"At first glance, we would expect only minimal changes to our 2007 numbers, with potential upside to 2008, on the back of the UK performance," Mr Gunn continues.

"To underpin management's confident outlook, it has proposed a 50pc increase in the interim dividend from 2c to 3c against forecast of 2.2c," he says.

John Mattimoe and Killian Jones expect 2007 profits from McInerney to be "flat". They are concerned about lower than expected margins in the UK. "The strong margin levels in Ireland is encouraging. A strong full year result from UK housing is expected in the full year," the Merrion analysts feel.

But it added the rider that growth could slow sharply if the cooling in the property market worsened.

The Tanaiste and Minister of Finance, Brian Cowen welcomed the IMF's "positive assessment" of the Irish economy's performance and prospects.

The report acknowledges the continued impressive performance of the economy with strong growth and one of the lowest unemployment rates among advanced countries.

"The IMF said that, following a visit to Ireland, that it expected gross national product (GNP) growth of 4.3pc this year, slowing to 3.2pc in 2008, while gross domestic product (GDP) is seen as rising by 4.8pc in 2007 and 3.5pc the following year.

The Tanaiste emphasised that this growth rate projection is very high by international standards and is far more favourable than those of our fellow EU member states.

Rapid house price increases and booming residential construction had been an important driver of economic growth and bank lending in the past, the IMF said, highlighting them as among the risk areas needing "careful attention."

The growth outlook of the United States and a deterioration in global financial market conditions, were also concerns. Ireland's banking system continued to perform well, but rapid credit growth meant it too faced vulnerabilities.

"The banking system is well-capitalised, profitable, and liquid, and nonperforming loans are low," the IMF said. "However, bank lending to construction and real estate firms amounts to 47pc of GDP."

The Tanaiste welcomed the IMF's endorsement of the Irish banking system.

The IMF noted that all stress tests carried out in Ireland indicated that cushions were adequate to absorb a range of shocks. "The banking system is well-capitalised, profitable, and liquid, and nonperforming loans are low".

The Irish Times reports that Ireland would lose substantial corporate tax receipts to big EU states under a formula being proposed for a common consolidated corporate tax base (CCCTB) in Europe.

Tax experts from all 27 EU states will gather in Brussels tomorrow to discuss the new formula, which includes a controversial element known as a "sales factor".

This would, for the first time, recognise the role played by consumers in creating demand for a product by incorporating it as an element within a harmonised EU corporate tax base. In other words, the "sales factor" would divert a portion of a company's corporate tax receipts to the EU state where the consumer buys the product, rather than the state where the firm is based.

Fianna Fáil MEP Eoin Ryan said yesterday that the latest proposal from the European Commission on a CCCTB was "ill-conceived" because it favoured big European states with a large number of consumers over smaller EU member states.

"This is a process of introducing tax harmonisation through the back door - and let no one think otherwise . . . It will suck the economic activity of Europe into the larger member states and weaken smaller member states," said Mr Ryan, who has been leading opposition to the CCCTB proposal from within the European Parliament.

Tax commissioner Laszlo Kovacs says his plan would simplify the corporate tax regime for multinational firms working across borders in Europe. However, states with low corporate tax rates such as Ireland and Slovakia fear it could erode tax competition and harmonise tax rates.

The core of Mr Kovacs's plan is that the profits of businesses operating in more than one EU state should be calculated according to a single EU-wide formula, rather than the 27 formulae currently used. Profits would then be reallocated to the countries in which the businesses are active, to be taxed at the tax rates of those countries.

He is also proposing consolidation, which means firms would be able to treat all their European businesses as one business for tax purposes.

The key to the CCCTB proposal is designing a new profit allocation formula that will enable member states to apportion the corporate taxes paid by multinationals. For example, profits may be allocated between countries using measures including size of payroll, value of asset base within a particular country, sales or other measures.

A working document prepared by the commission for tomorrow's meeting supports the prospect of introducing the "sales factor" into the formula.

It concludes that "many experts have expressed sympathy for the inclusion of a sales factor" because of the stability it is likely to introduce into the allocation mechanism. It says that if a "sales factor" is included, it should be based on "sales by destination", which would reflect the contribution of demand to the generation of income.

However, the paper notes that some experts are opposed to this method because the accepted function of corporate taxation until now has been to tax production rather than consumption. Consumption is already taxed in Europe through VAT, it says.

Department of Finance officials are expected to attend the meeting tomorrow and argue strongly against incorporating the "sales factor". But many tax experts expect Mr Kovacs to include it in the commission's final proposal on CCCTB next year.

The Irish Times also reports that harmonisation of corporation tax between Northern Ireland and the Republic would be beneficial but must not be considered as an economic "antibiotic", the North's Deputy First Minister Martin McGuinness said in Dublin last night.

The "unprecedented democratic accountability" that now existed North and South was a major factor in seeing that economic development benefited society as a whole, Mr McGuinness told the Institute of Directors' North/South dinner in Dublin Castle, where he was guest of honour.

In mid-October, Sir David Varney is due to recommend to the British chancellor of the exchequer, Alastair Darling, whether Northern Ireland should be granted special status to establish a 12.5 per cent corporation tax - the same as in the Republic.

The Deputy First Minister said, although he would support a harmonisation of rates between the North and South, it should not be regarded as a cure-all.

"Too often this is presented as some form of industrial antibiotic which will cure all economic ills. It won't. Studies have shown that a favourable tax regime is only one of a range of elements needed for a successful foreign direct investment strategy," the Sinn Féin MLA said.

Other components necessary to develop a thriving economy included quality infrastructure, as well as a skilled workforce.

Mr McGuinness expressed confidence about the economic future. "Communities have never been better placed to influence and determine policy and strategies that will influence the management of economies North and South. In addition, the goals of government and business are not incompatible," he said.

The Irish Examiner reports that Irish wind energy company Airtricity expects to have 40,000 acres under wind farms in the US by 2009 delivering 1200MW of renewable energy. The company is 51% owned by NTR.

The company has $900m (€634m) worth of projects in the pipeline and yesterday signed a $330m (€233m) energy deal with General Electric during an Enterprise Ireland trade mission in the Irish Embassy in Washington.

Enterprise, Trade and Employment Minister Micheál Martin speaking at the function said that following this deal, Airtricity is now the fifth largest generator of wind power in the US.

“The move towards greener and cleaner energy should not be viewed as a challenge for Irish industry but as an opportunity for our companies to lead the way in new technology.

“Under this deal Airtricity will continue development of windfarms in Texas with turbines provided by General Electric. This Irish firm employs 400 people with 15 windfarms in Ireland, Scotland and the US,” he said.

Airtricity North America chief executive officer Declan Flanagan said once the planned projects are in place by 2009 the company will be generating twice the amount of energy in the US from wind than generated by the ESB’s Moneypoint facility in Clare.

Commenting on the deal, Airtricity’s chief executive, Eddie O’Connor (pictured) said: “The power source (fossil fuel) that enabled the West to achieve such historical wealth is peaking in output and becoming more expensive. The world has turned to wind energy and every country is in a race to the future to deploy it as widely as possible. Orders for turbines have to be placed two years in advance.

“Governments must recognise this and the need to support their most advanced companies in their drives to keep pace with the fastest growing world industry.

This is a great deal for the US, Airtricity and GE.”

“GE Energy is committed to helping our worldwide partners and customers design and implement wind energy solutions for their cleaner energy needs. We are pleased that Airtricity, an industry leader and valued partner, continues to show confidence in our 1.5mw wind turbine technology,” said Vic Abate, VP of Renewables for GE Energy.

The Financial Times reports that Northern Rock bowed to mounting pressure and scrapped its controversial dividend payout amid continuing uncertainty over the future of the beleaguered mortgage lender.

The bank said on Tuesday that it had received a number of approaches from unnamed parties about “a variety of potential transactions”, including a takeover. It said it was holding preliminary talks with several parties about these transactions but warned there could be “no certainty as to the outcome of such discussions”. That helped lift the shares 5.2 per cent to 172p in early trading on Wednesday.

Northern Rock’s decision to cancel paying the dividend was made after the bank came under pressure from regulators and MPs to drop the £59m payout, which it had announced before it was hit by the financial crisis.

The move was greeted with dismay by hedge fund manager RAB Capital, which became Northern Rock’s biggest shareholder last week through its Special Situations fund.

RAB, which is run by Christian philanthropist Philip Richards, said: “We disagree with the decision about the dividend”, adding that it was tempted to agree with suggestions that “the Bank of England and Treasury would like to see Northern Rock shareholders wiped out”.

However, other investors recognised that the dividend payout would alienate the government and result in an outflow of cash that would make the company less attractive to bidders. 

The Association of British Insurers, which had earlier suggested one option for the board was to delay the dividend, said on Tuesday night: “We are pleased that the board has taken our concerns into account and have taken action on the issue.”

The move comes as pressure mounts for a quick resolution to the crisis, with some senior bankers saying action is needed within weeks. Last night it emerged that the Treasury and the Financial Services Authority had hired law firm Slaughter & May to work with Goldman Sachs to advise on options for Northern Rock.

Roger Lawson, of the UK Shareholders Association, which represents private investors, has now formed an action group for Northern Rock investors and intends to oppose any quick sale of the bank.

He said: “It is unfortunate that the company has left it at such a late stage to make an announcement on the dividend. But our real concern is to prevent a fire sale of the company and ensure private equity buyers will not buy it on the cheap.”

The FSA offered the bank to a range of UK and international lenders before the extent of its difficulties became clear. Since the bailout was announced, most large banks have kept their distance because of concerns about the cost of financing Northern Rock’s £113.5bn balance sheet and the damage to its brand.

Northern Rock has received an approach from a group of Spanish investors led by Jose Maria Ruiz-Mateos, an entrepreneur, but there have not been any talks.

Separately, the Bank of England is on Wednesday due to hold a £10bn auction of three-month liquidity in an effort to ease funding pressure on the banking system.

It also emerged that John McFall, chairman of the Treasury select committee, is set to ask Adam Applegarth, chief executive of Northern Rock, as well as chairman Matt Ridley to appear before the committee as early as next month.

The FT also reports that Japan’s share of the global foreign exchange market has slumped to its lowest level in at least 12 years, according to a new report.

Currency trading volumes in Japan fell from 8.3 per cent of the global total in April 2003 to 6 per cent in April 2007, the Bank for International Settlements’ latest triennial survey of the foreign exchange market found. The April level was the lowest since the survey began in 1995.

The survey showed global average daily volumes on the foreign exchange markets exploded by 71 per cent from $1,880bn in April 2004 to $3,210bn in April 2007.

The BIS said the massive increase had been fuelled by increasing hedge fund activity, particularly using quantitative trading models, and increased interest from retail investors.

The increasing use of foreign exchange as an asset class by institutions such as pension funds had also boosted volumes.

However, analysts said Japan had been slow to adapt to changes in the foreign exchange market, with hedge fund activity not keeping pace with growth elsewhere and institutions with longer-term investment horizons slow to invest in the currencies.

Elsewhere in the region, Australia’s share of the foreign exchange market grew from 3.4 per cent to 4.2 per cent, while Hong Kong’s rose from 4.2 per cent to 4.4 per cent.

London’s dominance of the global foreign exchange market continued as New York lost share. The news will come as a fresh blow to New York which has seen its position as a financial centre come under competitive pressure.

The report revealed the UK’s share of the foreign exchange market grew from 31.3 per cent in April 2004 to 34.1 per cent in April 2007. This was more than double that of the US, which saw its share of the market fall from 19.2 per cent to 16.6 per cent.

Analysts said London’s pre-eminence allowed currency investors to benefit from economies of scale.

“The biggest investors like to trade where there is liquidity,” said David Woo at Barclays Capital. He said most of the world’s large currency investors were now based in London.

London has also benefited as the preferred trading centre for Asian central banks, which have built up massive forex reserves. Analysts said the City’s time zone made it a more convenient place to trade than the US.

The New York Times reports that some of the nation’s biggest insurance companies will urge the Senate Finance Committee today to change rules that enable some of their competitors to avoid billions of dollars in federal taxes by sending money to themselves in Bermuda and other tax havens.

At issue are federal rules that allow insurance premiums to be shifted from the United States to offshore affiliates — which reduces taxes — and allow the proceeds to be invested tax free, increasing the profit to parent companies. The companies that do this say they are following the letter of the tax code.

The core of the dispute is an unusual tax treaty with Bermuda. It allows insurance companies based on the island to deduct from their American taxes premiums that their subsidiaries in the United States collect from American customers and send back to the headquarters abroad. In Bermuda and other tax havens, the money is invested tax free.

This money is moved, under the law, through the purchase of reinsurance by the affiliates from their parent companies.

Americans and American businesses paid $499 billion for property and casualty insurance in 2006, nearly 4 cents out of each dollar of the gross national product.

Nearly all insurance companies buy reinsurance, or insurance on their own policies, to reduce the amount they have to pay to cover claims. Reinsurance is a tax-deductible business expense.

But the insurers that want the tax law changed contend that when an American affiliate buys reinsurance from its Bermuda parent, the company is merely moving money from one pocket to another. A result, they say, is an unfair profit for the offshore company and less taxes paid to the federal government.

Usually, insurers try to keep business expenses to a minimum. But for those companies with units in the United States and Bermuda, the more reinsurance they purchase from the parent company, the lower their United States taxes and the more money the parent company is able to invest tax free.

In a report issued Monday, the Congressional Joint Committee on Taxation, which advises the Senate Finance Committee, said that from 2001 through 2006, purchases by American subsidiaries of reinsurance from their parent companies in Bermuda rose by $16.6 billion, to $32.5 billion.

That is more than 20 times the rate of growth in similar spending by companies based in the United States, which do not qualify to transfer money as their Bermuda competitors do. Their purchases from unrelated offshore companies rose just $700 million, to $22.2 billion.

Insurers like Liberty Mutual, Hartford and Chubb, which cannot easily capitalize on the rule, want Congress to close what they see as a loophole so they can better compete with rivals like Ace, XL and Arch.

William R. Berkley, the chief executive of W. R. Berkley and a leader of the coalition of insurers appealing to Congress for a change, said that unless the law is changed, “in 10 or 15 years all the domestic property and casualty insurance companies are going to have to go offshore.”

Mr. Berkley and the others in the coalition are using two appeals to lawmakers: moral outrage and threats to take their money to Bermuda themselves.

“I think it’s morally wrong,” he said, “but if we can’t get the government to change the rule, we may ultimately have to do it.”

ACE, XL and other Bermuda companies are fighting back under the banner of the Association of Bermuda Insurers and Reinsurers. Other companies reinsuring American subsidiaries’ policies through parents in Bermuda include Everest Re, Arch Capital, Endurance Specialty Holdings and Allied World Assurance.

ACE and some of the other companies declined to comment on the tax issue. But through their trade group they contend that they are doing nothing wrong and are following the United States tax code. Moreover, they say, the tax law is a valuable tool for attracting foreign investment to the United States and should not be changed. The foreign investments, the companies say, are far more important to the American economy than any taxes forgone in the transactions.

“If a company in Germany is making widgets to sell to buyers in the United States, the profits on those widgets are not taxed in the United States but in Germany,” said Kenneth J. Kies, a tax lawyer and former chief of staff of the Congressional Joint Committee on Taxation who has worked for some of the Bermuda companies. “It’s the same concept with the insurance.”

Donald Kramer, the chief executive of Ariel Reinsurance, plans to testify on behalf of the Bermuda insurers today. He said in an interview yesterday that critics of the tax law often overstate the benefits to Bermuda insurers. Mr. Kramer said a strong insurance industry in Bermuda helps the United States economy by providing coverage for catastrophes like Hurricane Katrina that is otherwise scarce. Also, he said, a change in the tax law would probably mean higher insurance prices for many Americans.

“If you tried to shut this down,” he said, “the U.S. economy would suffer.”

Ending the tax treaty with Bermuda is among the solutions proposed in the report by the joint tax committee.

Congressional aides said several members of the Senate Finance Committee favor revising the federal tax law to force companies like Ace and XL, which have become important insurers of corporate America and are based in Bermuda, to pay taxes at the standard corporate rate of about 35 percent. Last year, Ace reported a federal tax rate of 17.9 percent. XL’s rate was 11.4 percent, and Arch Capital Group’s was 3.4 percent.

Insurance experts say one reason the companies in the coalition have not moved to Bermuda, now one of the world’s most important insurance centers, is that those companies have been in business for decades, and to reorganize in Bermuda they would have to pay billions of dollars in capital gains taxes.

On the other hand, the companies that are reaping the tax benefits are relative upstarts. ACE and XL, for example, were started in Bermuda in the early 1980s. Dozens of insurers are now based in Bermuda, including some transplants from London. A few Bermuda insurance companies were started with largely American financing after the Sept. 11, 2001, attacks to capitalize on the soaring prices of property and casualty insurance.

Because companies using the Bermuda arrangement earn bigger after-tax profits, they enjoy a higher stock price relative to their profits and they build financial muscle much more quickly. They could, instead, charge lower premiums to gain market share, but executives on both sides of the dispute said that had not been the practice.

The committee report does not specify the federal taxes forgone, but if the premiums sent to sister companies in Bermuda earn a 10 percent annual return, then each $30 billion transferred to a sister company in Bermuda or other tax haven costs the government — on investment earnings alone — about $1 billion a year. That loss compounds as more premiums are moved out of the United States and investment returns swell offshore assets.

In 18 years, the committee said, the assets of Bermuda insurers grew tenfold, to $172.7 billion in 2001. The report showed, by other measures, that since then the transfer of funds to Bermuda has been accelerating.

The NYT also reports that months after thousands of passengers were stranded for hours on airport runways last winter, airlines still have not agreed on how many hours confined passengers would have to wait before they can demand to be released from a plane, the Transportation Department’s inspector general has found.

But in a report delivered to Mary E. Peters, the transportation secretary, the inspector general’s office stopped short of recommending a time limit itself, prompting one passengers’ advocate to describe the report as “weak.”

The inspector general, Calvin L. Scovel III, found that some airlines — like Delta Air Lines and US Airways — have no formal commitment to allow passengers off a stranded plane.

Other airlines do commit to release passengers, after waits of two to five hours. Some also have committed to bring food and water out to the plane, but the waiting time varies from one to three hours, as the industry has failed to adopt a standard for what constitutes an excessive delay.

“We think it is unlikely that passengers’ definition of an extended period of time will vary depending upon which airline they are flying,” the inspector general noted in the report, suggesting that the industry adopt a consistent approach.

The inspector general concluded that two highly publicized recent episodes of stranded passengers — by AMR’s American Airlines and JetBlue Airways last winter — occurred because the airlines lacked a comprehensive plan to avoid or minimize such delays.

Bad weather was at the root of the problems, which stranded thousands and prompted calls for stricter airline regulation. But the airlines’ own actions made things worse, the report said. Some passengers were stuck on planes for more than eight hours.

Essentially, Mr. Scovel’s examination found that not much has changed in the airline industry’s approach to stranded passengers since 1999, when Northwest Airlines stranded passengers for long hours on a snowy Detroit runway.

Airlines successfully lobbied at that time to be allowed to solve the problem themselves. But in many instances, airlines did not follow through, Mr. Scovel said in the report, and they were still ill-prepared to get passengers off planes last winter.

In December, 67 American Airlines planes sat on runways for three hours or more. In February, 9 JetBlue flights sat for six hours or more.

This June was the worst month since 2000 for stranded flights, according to the Bureau of Transportation Statistics, which counted 462 flights taxiing out and being stuck on runways for more than three hours.

Moreover, officials acknowledge those figures do not capture the full extent of the problem because diverted and canceled flights are not included.

Still, the inspector general stopped short of suggesting a time limit to confinement on a stranded plane.. “We did not make a specific recommendation,” said Madeline Chulumovich, a spokeswoman for the inspector general. Mr. Scovel declined to elaborate on the report.

Paul Hudson, who heads the Aviation Consumer Action Project, which is affiliated with Ralph Nader, said the inspector general’s office “did a reasonably good job investigating the problem.”

However, he added, “the recommendations are as weak-to-nonexistent as ever. There is no mention of the word ‘rights.’”

With jets more crowded than ever, and the air traffic control system overwhelmed in places, “you’re going to see the problem worsen,” Mr. Hudson said.

A House subcommittee is scheduled to conduct a hearing today on flight delays and other problems in customer service. Mr. Scovel is scheduled to appear, along with other transportation officials, industry representatives and passenger advocates.

As part of other legislation, the House has adopted what proponents call a passengers’ bill of rights, requiring that food and water and usable lavatories be provided to stranded passengers.

Although advocates had lobbied for a three-hour limit, the legislation also stops short of requiring airlines to allow passengers off the plane after a certain number of hours. Instead, it requires airlines to adopt specific plans for such instances and to disclose those plans to the Transportation Department.

James May, president of the Air Transport Association, the airlines’ lobbying group, in testimony prepared for today’s hearing that was released by his office, reiterated his group’s opposition to any time limit for stranded fliers. “Imposing an arbitrary time frame to deplane passengers will have numerous unintended consequences that are likely to increase cancellations and cause even greater delays,” his testimony said.

The inspector general recommended that the industry adopt a uniform time limit for keeping stranded passengers on planes and a time frame for bringing fresh supplies aboard.

He also said the industry needed to establish specific targets to reduce chronically delayed flights and to disclose to ticket buyers the on-time performance of flights. His report called for airlines, airports and regulators to work together to avoid stranded flights.