ISME declares Morgan Kelly's SME fears as 'pessimistic and unrealistic'
Published 10/03/2014 | 09:29
The SME sector maintains that the latest concerns from a leading economist for small and medium firms are not as pessimistic as has been outlined.
Professor Morgan Kelly - who famously predicted the property and banking crash – said that debt issues in Ireland's small firms will be uncovered through the European Central Bank's planned inspections of our banks.
And he told students at a UCD seminar that if there was to be a quick "clean-up" of remaining Irish banks, Ireland could be facing something "very, very horrible quite soon".
However, CEO of ISME Mark Fielding told independent.ie that the ECB's action won't be as severe as Professor Kelly fears.
“Our view is that, while Morgan Kelly is right in the overall context, the public have overlooked that he uses the word ‘if’ and we simply don’t believe that this scenario will unfold.”
“There is no reason for Mario Draghi to enforce such rigorous action – we have been the best boys in class so far. It would not be in their best interest,” he said.
Mr Fielding also told independent.ie that the debt held by SMEs has been looked at in a more negative light than necessary.
“SMEs hold about €57bn in bank loans, of which €32bn relates to property that is not core to the business. Some of this is non-performing and we have to accept that – but banks are taking a much more pragmatic view when it comes to reaching a solution with businesses.”
ISME believes that banks have are now prepared – and have the expertise – to achieve a level of debt forgiveness, with the ability to separate the bad loans from good.
But more needs to be done to support the ‘heart of the Irish economy’, according to ISME, as a recent survey from the group shows a rise in the number of small businesses being turned down for a loan by their bank.
While more SMEs are looking for credit than ever before, half of all companies were not approved for a loan at the end of last year.