ECONOMY
ONE OF THE TOPICS BEING COVERED AT THE SFA
SMALL BUSINESSES. SORCHA CORCORAN HEARS FROM
ANNUAL CONFERENCE IS THE ECONOMIC OUTLOOK AND HOWIT’S AFFECTING
SPEAKER DANNY MCCOY OF IBEC AND DAFT FOUNDER
EAMONN FALLON ONWHAT NEEDS TO HAPPEN TO
BREATHE LIFE INTO THE ECONOMY
Froman economic perspective, the critical factor at the mom- ent for small to medium-sized enterprises (SMEs) in Ireland is the need to get consumer confidence going again, according to DannyMcCoy,director-general of IBEC,and one of the speak- ers at this year’s SFA Annual Conference. “The scale of the importance of SMEs to the economy is enor-
mous – about 95pc of businesses fall into the SME category and most are involved in employment-intensive activity. SMEs are critical in bringing the economy back into an employment-laden phase,”he says. “Fundamentally,most SMEs are still focused on the domestic
marketwhere demand is still lagging.This has to be amain pol- icy priority. It’s true the Government has its hands tied with its commitments to bank bailouts and correcting public finances, butwe really need to break the vicious circlewhere consumers are saving themselves out of their jobs [in other words saving rather than spending, so jobs are lost]. “Business confidence is improving, but froma low base.Com-
panies are in very difficult territory as their effective demand from consumers is not there at themoment.Despite supply-side issues, access to credit is a ‘Catch 22’ situation as you need demand to startmoving to justify lending to get businesses up and running.” McCoy notes that business failures are very significant in the
SME sector, but the main failures are those exposed to domes- tic demand, ie retail and construction activity. “The story is more positive when you look at export markets.
Quite a number of SMEs are performing well having restored their competitiveness.They tend to be involved in highly pro- ductive activities that are not labour intensive, and are getting into newmarkets by technological advancement, allowing them tomove up the value chain. “This is good for growth in the economy but it’s not a huge
boost in terms of headcount – that’s what’s worrying.There isn’t sufficient employment to cover the amount the Government needs to raise to finance the deficit and dealwith the fallout from the banking crisis.” He believes theGovernment can help the situation by trying
to give an indication of how much taxation it intends raising – and how – in the next budget and into the future.“Energy costs and access to credit are all important on the supply side,but con- sumers have to be confident to start spending and need to know what level of disposable income they’re going to have.” One area where consumer demand has massively changed is,
DannyMcCoy
of course, property and property prices and rents are a fair indi- cator of how the economy is progressing.
DEMAND FOR GROWTH 20 OWNER MANAGER VOL 3 ISSUE 4 2010
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