NEWS TAX RECEIPTS ON
THE RISE Te gap between government spending and its tax intake narrowed substantially in January 2011, as total tax receipts for the month increased by 1.9pc. Exchequer figures published by the Department of
Finance showed that total tax receipts for the month were €3.1bn, which is €57m more than in January 2010. Te new figures show a deficit of €483m for the month, down from the €780m noted a year earlier. Despite large hikes in rates taking effect, the income
Fall in lending by Irish banks
tax receipts were down €65m, or 6.5pc, on last year. However, this fall was offset by increases in VAT, corpo- ration tax and excise duties of €58m, €31m and €21m respectively. Money spent by the Government was just over
€3.9bn, which is €196m (4.8pc) lower than in January 2010. Of the 15 Government departments, 12 said they spent less in January when compared with the same month last year.
New €85m equipment fund
for SMEs AIB has launched a fund of €85m to support SMEs in the purchase of equipment for their businesses, available to all existing or potential clients in this sector. Tis initiative is part of AIB’s recapitalisation commit- ment to the Government of an additional €3bn in new or additional SME lending in 2011. AIB has forged relationships with many of the major equipment and machinery suppliers in Ireland. Robin Bradley, head of asset finance and intermediary business, AIB Bank, said: “Almost all businesses require some form of equipment financing. Asset financing, through our hire purchase and leasing products, is particularly suitable for those businesses that wish to preserve existing working-capital credit lines for prudent cash management.
FEWER COMPANIES WENT BUST IN JANUARY
January 2011 was a better month for Irish businesses when compared with January and December 2010, with just 96 companies going bust. Te figure of 96 marks a drop of 28pc when compared to the previous month, and a 13pc decrease on the number of insolvent companies in January 2010. New statistics released by
InsolvencyJournal.ie show that
three companies went out of business per day for the first month of 2011. Commenting on the figures, Ken Fennell, a partner with Kavanagh Fennell, the firm that compiles the data, said: “While the reduction in insolvencies both from December and year-on-year comparison is welcome news, it is a little early to predict if the rate of insolvencies have peaked and it will be interesting to see the figures for the first quarter of 2011 in comparison to 2010.”
VOL 4 ISSUE 1 2011 OWNER MANAGER 9
According to the Central Bank, the decline in lending by Irish banks continued in December 2010, but the fall was not as sharp as in previous months. Lending to businesses fell 1.2pc in the year, but this com-
pared favourably with November’s figure, which showed a decline of 1.9pc. Companies paid back €51m more than they borrowed
during December, according to the Central Bank, marking the smallest gap recorded in the last six months of 2010. Te new data released by the Central Bank also shows that
Irish banks’ borrowings from the European Central Bank dropped by €2.8bn during December, bringing the total borrowed to €94.6bn. Lending to consumers and households also dropped in the month. In addition, private sector deposits fell in the Irish institutions.
CONSUMER SENTIMENT
IMPROVES A surprise improvement in consumer sentiment was noted in January 2011, according to the latest KBC Ireland/ESRI index, which rose to 48.7. Te index was recorded at 44.4 in December. Although the yearly decrease is still quite sharp, as the January 2010 survey showed a value of 64.6, the figure still remains above the all-time low of 39.6, noted in July 2008. “Te improvement in consumers’ perceptions of the
current environment reflects the view that January was a good time to purchase major items. Historically, this component has improved every January, reflecting, at least in part, the winter sales,” said David Duffy from the ESRI. However, the economists expect a more subdued
figure in February. Duffy said that consumers remain cautious and the majority of people expect unemploy- ment rates to increase again over the next 12 months. Austin Hughes of KBC said that the jump in January
is usually larger than it is this year. He added: “It would be wrong to conclude that the January numbers hint at a turnaround in sentiment and spending.”
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