WEBVTT - Colin Hunt Talks Irish Economy, Trade Policy

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>So we've got key economic data here joining us from Trinity,

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<v Speaker 2>the PhD in economics, Colin, how would you like to.

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<v Speaker 1>Chime in, sir on US economic data and we avoid

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<v Speaker 1>the US is at a very instant juncture. You obviously

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<v Speaker 1>have an increase in inflation pressures, the signs of the

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<v Speaker 1>labor market is weakening. So this is a uncomfortable moment

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<v Speaker 1>for policymakers.

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<v Speaker 3>I suspect we welcome you from Allied Irish Bank.

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<v Speaker 2>Colunt Hunt with us here and of course with all

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<v Speaker 2>of his Trinity Economics. Let's first identify AIB right now,

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<v Speaker 2>this is safe to say you're owned by the Irish government.

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<v Speaker 1>How do you answer that question? We were owned by

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<v Speaker 1>the Irish government. The Irish government came to our rescue

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<v Speaker 1>post the GFC and for the period of about fifteen years,

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<v Speaker 1>the Irish government had a presence on our share register

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<v Speaker 1>and in June just gone, we marked the Irish government's exit.

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<v Speaker 1>And again the organization is one hundred percent privately owned

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<v Speaker 1>and in fact, one of the reasons that I'm here

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<v Speaker 1>this week with the Barclay's Financials conference yesterday and meeting

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<v Speaker 1>a lot of our investors, most of our very significant

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<v Speaker 1>investors are based here in the United States, so this.

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<v Speaker 2>Is very important. We'd like to have some news here.

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<v Speaker 2>Jennifer Dugan's waiting in Dublin for this. Can we suggest

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<v Speaker 2>that there would be some form of public offering of

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<v Speaker 2>shares of Allied Irish Bank in the coming weeks?

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<v Speaker 3>Quarters? Can you make an announcement today.

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<v Speaker 1>That there's certainly no announcement to be made because we

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<v Speaker 1>are one We're one hundred percent free floating at this stage.

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<v Speaker 1>So the government has exited the register. They came to

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<v Speaker 1>our rescue with about twenty almost twenty one billion euro.

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<v Speaker 1>We repaid that and now we are one hundred percent

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<v Speaker 1>privately owned.

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<v Speaker 3>This started well, it started very well, doctor.

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<v Speaker 4>How do you give us some perspective ons of the

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<v Speaker 4>appetite for cross border transactions at this point in time?

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<v Speaker 4>So here we're living this day in day out, the

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<v Speaker 4>kind of ambiguity or uncertainty about trade policy and andomic

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<v Speaker 4>policy more broadly, What do companies domiciled outside of the

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<v Speaker 4>United States think of this environment and how's that affecting

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<v Speaker 4>business as.

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<v Speaker 3>You see it?

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<v Speaker 1>Well, I suppose the environment we had a period of

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<v Speaker 1>uncertainty earlier on this year, very very warmly welcomed the

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<v Speaker 1>fact that we have come to an agreement between President

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<v Speaker 1>Trump and President vonder Lyin which was announced in Scotland

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<v Speaker 1>a few weeks ago. Businesses, you know, hates uncertainty. We

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<v Speaker 1>have certainty now. Would you pick a tier level of

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<v Speaker 1>fifteen percent? You wouldn't necessarily, but that's the reality. That's

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<v Speaker 1>what we're dealing with, and at least the uncertainty now

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<v Speaker 1>has been has been eliminated. The United States is a

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<v Speaker 1>hugely important market for Ireland, not only as a source

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<v Speaker 1>for our exports, but also as a place where.

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<v Speaker 3>Irish businesses invests. So typically Irish businesses.

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<v Speaker 1>When they outgrow a market that is growing quite robustly

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<v Speaker 1>but still quite small, they typically go to the UK

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<v Speaker 1>first and then they go to the United States. So

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<v Speaker 1>that was the path we followed.

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<v Speaker 3>We've been here in New.

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<v Speaker 1>York for fifty years this year, and we're still all

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<v Speaker 1>the way through the crisis, we maintained and all the

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<v Speaker 1>way through our period of government ownership, we maintained our

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<v Speaker 1>physical presidence here.

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<v Speaker 3>It's a really important.

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<v Speaker 1>Place from us from an investment perspective, but it's also

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<v Speaker 1>a really important country for deployment of our loan book,

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<v Speaker 1>and of course other Irish businesses followed us as well.

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<v Speaker 1>So you have the likes to see r H, the

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<v Speaker 1>likes of Smurfoot, WestRock, the likes of Kerry Group, all

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<v Speaker 1>having very significant exposures to the United States. Notwithstanding the

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<v Speaker 1>uncertainty we had earlier this year, it's still a hugely

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<v Speaker 1>important market and it's a hugely important provider of external capital.

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<v Speaker 4>How is the Irish economy doing today? When you look

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<v Speaker 4>at the housing market, at commercial investments, what's the relative

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<v Speaker 4>health of the Irish economy in twenty twenty five.

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<v Speaker 1>Colomy is doing quite well, like Irish GDP numbers. Because

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<v Speaker 1>of the scale of the international sector in the economy

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<v Speaker 1>can be wild and volatile, so we tend not to

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<v Speaker 1>look at GDP. We tend to look at modified mes

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<v Speaker 1>to demand. So this year we're talking about growth summer

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<v Speaker 1>of the order of about two point three two point five

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<v Speaker 1>percent in real terms, unemployment about four percent, and total

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<v Speaker 1>employment in the state now running a two point eight million.

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<v Speaker 1>That sounds small, but when I was in college all

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<v Speaker 1>those many many years ago, thirty five years ago or so,

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<v Speaker 1>we had one million people at work. So this is

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<v Speaker 1>an economy usherly transformed. Right and now when the best

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<v Speaker 1>performing in Europe.

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<v Speaker 2>Colin hunt with us with the Allied Irish Bank, and

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<v Speaker 2>we continue. We're commercial free with you across America, in

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<v Speaker 2>Ireland and around the world. Here is through this important

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<v Speaker 2>economic report in fourteen minutes ed Ludlow's schedule to be

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<v Speaker 2>with us. Here in a bit on the important Apple meetings.

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<v Speaker 3>I was talking with Olivia Fletcher. She calls me up.

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<v Speaker 3>Olivia calls Okay, She goes, did I wake you? It's

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<v Speaker 3>three am. I'm like, Olivia tiny hey, Colin, I got like.

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<v Speaker 2>An hour conversation with you, and I think frankly President

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<v Speaker 2>Trump could have an hour conversation with you. Let's talk

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<v Speaker 2>about this strange corporate book in Dublin, in the fact

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<v Speaker 2>that people sophisticated like Blackstone are literally giving the keys

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<v Speaker 2>back and office buildings.

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<v Speaker 3>What is the state of commercial real estate?

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<v Speaker 2>And as you say, a completely rebuilt Irish economy.

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<v Speaker 1>So the commercial real estate market had a very good run,

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<v Speaker 1>and then once we had the turn in the official

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<v Speaker 1>rate cycle, you began to see valuations coming.

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<v Speaker 3>Back quite a bit.

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<v Speaker 1>Of course, you had the COVID impact and the impact

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<v Speaker 1>on commercial valuations because of working from home. That would

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<v Speaker 1>have added it led to a drmward adjustment as well,

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<v Speaker 1>but we have seen quite a different step back in

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<v Speaker 1>valuation market clearing. I think the market is clearing, and

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<v Speaker 1>certainly we're beginning to see signs of people of higher

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<v Speaker 1>degrees of interest in the market. There are trades taking place.

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<v Speaker 1>The valuation adjustment seems to be behind us. If anything,

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<v Speaker 1>I would have expected that to happen a little bit

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<v Speaker 1>earlier because of the turn in the rate cycle. But

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<v Speaker 1>I do think we are at the bottom.

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<v Speaker 3>Cycling through.

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<v Speaker 4>A related question, perhaps closer to home, I'm wondering what

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<v Speaker 4>your offices are looking like. I remember reading you're trying

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<v Speaker 4>to get employees back three days a week. Some push

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<v Speaker 4>back to that, As I know, there was here in

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<v Speaker 4>the States with a number of financial institutions and other businesses.

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<v Speaker 4>Here we are at the end of the summer looking

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<v Speaker 4>to the fall. Where does that process stand? Were you

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<v Speaker 4>surprised by the reaction? Folks didn't want to come in three.

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<v Speaker 3>Days, so we didn't want to hear this question.

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<v Speaker 1>I will answer there's no question I don't want to

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<v Speaker 1>hear it. I'm more than comfortable in answering to that.

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<v Speaker 3>Look we had.

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<v Speaker 1>We have a situation where we have effectively three types

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<v Speaker 1>of work patterns inside in the organization. Our branch staff

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<v Speaker 1>are in five days a week. Our call center staff

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<v Speaker 1>are in five days a week, our security people in

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<v Speaker 1>five days a week. We have some people who work

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<v Speaker 1>from home two days a week. We currently have a

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<v Speaker 1>group of people who work from home three days a week,

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<v Speaker 1>and we're asking that group of our colleagues to come

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<v Speaker 1>into the office an additional day. I think it is

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<v Speaker 1>really good for culture. I think it's good for learning

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<v Speaker 1>and development. I think ultimately it is good for the business.

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<v Speaker 2>Question to Nicholas Booth at Stanford's wonderful giving me the

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<v Speaker 2>best explanation of this i've heard. Are you down the

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<v Speaker 2>road believing that you're going to compensate people who are

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<v Speaker 2>in five days a week versus the work from home crew?

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<v Speaker 1>Well, the contracts that people have layout in great detail

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<v Speaker 1>their base of employment.

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<v Speaker 3>We're not.

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<v Speaker 1>We incentivize our staff to come to work through a

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<v Speaker 1>salary check that arives in their account on the twenty

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<v Speaker 1>fifth of every month, just because of time.

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<v Speaker 3>I've got to get to this.

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<v Speaker 2>There's a back and forth on trade and everything within Ireland.

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<v Speaker 2>With America and tariffs, and Trump comes down to the

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<v Speaker 2>pharmaceutical industry.

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<v Speaker 3>Give us, give us.

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<v Speaker 2>A state that allied Irish Bank sees of yes, the

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<v Speaker 2>weight loss drugs.

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<v Speaker 3>I'm not using Gurris, just cut and chisels.

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<v Speaker 2>Help us with the pharmaceutical dynamic that will change given

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<v Speaker 2>decisions by President Trump.

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<v Speaker 1>So some of the biggest farmer names here in the

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<v Speaker 1>United States have have had a physical presence in Ireland

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<v Speaker 1>for over fifty years. Ireland is very attractive location for

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<v Speaker 1>US investment. Gives you open, unfettered access to the largest

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<v Speaker 1>single market in the world in the European Union, common

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<v Speaker 1>law English speaking, and we have of course a cultural

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<v Speaker 1>and perhaps fraternal affinity with one another across the Atlantic.

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<v Speaker 1>So we have very the deep rooted US pharmaceutical companies

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<v Speaker 1>in Ireland. They are it's a it's a big driver

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<v Speaker 1>of our exports to the United States.

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<v Speaker 3>We did go through a period of.

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<v Speaker 1>Grave uncertainty earlier on this year, but I'm very happy

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<v Speaker 1>that that has been eliminated.

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<v Speaker 3>Now we have some certain humulation to tariffs in that sector.

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<v Speaker 3>Thank you for getting life flat beds on air Lingus

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<v Speaker 3>is doing. I used to be a director of aer

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<v Speaker 3>Lingus I was. I was active one that pushed it through.

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<v Speaker 3>I don't know who told you that, but links it's

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<v Speaker 3>like Icelandic airways back. You brought an entourage with your

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<v Speaker 3>older oh, with Guinness too. What is air Lingus is

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<v Speaker 3>all of a sudden got a buzz to it?

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<v Speaker 1>Does when our lingas had a buzz to it going

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<v Speaker 1>all the way back to its privatization.

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<v Speaker 3>Really in two thousand and six, have you got much flatbeds? Fine?

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<v Speaker 1>The life bat you need to fly more often with

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<v Speaker 1>our lingus. They've had life flat beds for the best

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<v Speaker 1>part of a decade, if not.

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<v Speaker 2>More, well, you know they have, but now they're really

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<v Speaker 2>pushing it.

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<v Speaker 3>Colin, Right, can you come back again? Are you going

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<v Speaker 3>to be in New York in the next five years?

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<v Speaker 3>I hope here in the next five weeks. All right?

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<v Speaker 2>Led Irish Bank and we said good morning to Boston,

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<v Speaker 2>the new Elied Irish Bank years ago. Colin, and thank

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<v Speaker 2>you so much, Doctor Han of eled Irish Bank, their

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<v Speaker 2>chief executive