Saturday 21 October 2017

Employers appeal for stimulus and credit

Siobhan Creaton

The Budget has done nothing to stimulate economic growth or tackle the lack of credit for Irish businesses, said groups representing big and small businesses.

Employers' lobby group IBEC slammed the Budget, saying it did little to help job creation or restore the competitiveness of the Irish economy.

IBEC director general Danny McCoy said the Budget could have been achieved in a way that was less damaging to the business sector.

"The Budget should give consumers greater certainty about their future incomes and encourage a resumption of more normal spending and saving patterns," he said.

Changes to employer PRSI relief on pension contributions will cost Irish businesses about €90m a year at a time when many employers are already struggling to keep pension schemes afloat, IBEC claimed.

"Cuts to some working-age welfare rates will also result in higher employment costs for business," Mr McCoy said.

"Tax changes for employee financial involvement schemes will also be an additional cost to employers."

IBEC was equally critical of the scale of the reduction of capital expenditure announced in the Budget, which it said was excessive.

Small business groups described the Budget as a wasted opportunity to give the economy a boost and to provide sufficient stimulus to business.

The association of Irish Small and Medium Enterprises (ISME) said the Budget was necessarily harsh but could have done more for the sector.

"By ignoring the specific concerns of small businesses and doing little to assist, promote or incentivise enterprise, the area of the economy that is relied on to produce wealth and generate employment, the minister is running the risk of killing the patient," it said.

ISME was also concerned that no attempt was made to redraft the Croke Park agreement, which it said would drain scarce resources out of the country for years to come.

Banking

The Small Firms' Association (SFA) welcomed the extension of the employer PRSI scheme and the retention of the 12.5pc corporation tax but said the Government had ignored the critical need for small firms to access credit.

"Many viable small businesses lack two key ingredients to access financial support from the banking system; they lack collateral because of the property bubble collapse and associated high negative equity; and they lack a good track record over the past two to three years because of the worldwide economic recession and loss of consumer confidence and spending at home," SFA chairman Dr Aidan O'Boyle said.

He said the sector needed the Government to intervene to breach the credit gap while the banks remained risk averse.

"We small businesses are the life blood of this country and it is time this was recognised," Dr O'Boyle said. "Time is running out. We need action."

The Irish Hotels' Federation (IHF) also criticised the lack of government support in providing bank credit for the sector and called for a credit guarantee scheme to be introduced.

The IHF, however, commended the Government for retaining current VAT rates.

Accountants

Meanwhile, the Institute of Certified Public Accountants in Ireland said there was no evidence in the Budget of a solid strategy to improve Ireland's international competitiveness.

"This Budget was a tax gathering exercise with little stimulus," its chief executive Eamonn Siggins said.

Chambers Ireland pointed to the failure to reduce local authority charges, which is a significant cost for its members, but welcomed the enlarging of the Business Expansion Scheme.

Irish Independent

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