Sunday 21 December 2014

Small firms are bouncing along the bottom, ISME chief warns

Published 03/01/2013 | 05:00

Mark Fielding: Croke Park deal must be renegotiated

SMALL businesses are "bouncing along the bottom" with little sign of a meaningful recovery, according to a new report.

The latest survey of quarterly business trends from lobby group ISME shows market conditions have improved somewhat over the last few months, but the overall narrative of a struggling domestic sector was unchanged.

The survey puts a percentage figure on several different indicators, such as business confidence, profitability expectations and future investment. Most indicators got better during the last quarter of the year, but many are still sitting in negative territory overall.

Business confidence imp- roved from -17pc in the third quarter of 2012 to -5pc by the end of the year. Profitability expectations improved from -20pc to -11pc, while future employment is now expected to be flat rather than declining slightly.

Only export-focused companies are showing signs of real growth, with more than 53pc of firms having positive expectations for shipping goods and services overseas. Some 41pc of firms reported positive exports at the moment. ISME boss Mark Fielding said the figures showed an economy that was "clearly bouncing along the bottom and striving for growth".

"[It is] a long way from the competitive economy aspired to. While the fourth-quarter figures are to be welcomed, the struggle by the SME sector is evident and the significant constraints of government-influenced cost increases, the lack of SME bank finance and the lack of real savings under Croke Park continue to inhibit the economic recovery.

"The Government needs to implement enterprise-led policies in 2013, combined with a revitalised Action Plan for Jobs which should focus on small business as the primary job creators," claimed Mr Fielding.

"Retailers have borne the brunt of weak consumer confidence in 2012 and we expect this to remain problematic in 2013. The Government must focus on maintaining employment in the weakest sectors of the economy and supporting them with new enterprise initiatives," he added.

Mr Fielding went on to demand that the Croke Park Agreement be renegotiated urgently.

Renegotiated

"Economic uncertainty continues to be the issue of most importance for SME owners, demonstrating to government that, while the global situation is difficult, the domestic economy must be assisted through a real jobs plan and a concerted effort to bring the state sector into line on costs.

"The private sector can no longer pay for the costly state sector and the elephant in the room, the Croke Park Agreement, must be renegotiated to bring greater and faster cost reductions.

"The sheltered public sector can no longer profit from increments and allowances, paid for by international borrowing, to be repaid from private sector taxes."

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