A national crisis demands a response from national government. Destructive flooding is normally met with a special allocation of emergency funds to help those most afflicted. For those politicians that have not noticed, a significant cohort of small Irish businesses are drowning in the aftermath of the British Brexit vote that has seen Sterling slide 15% in just two weeks, with Goldman Sachs forecasting the Pound has further to go.
Politicians are full of unknown unknowns
As many politicians are teachers, publicans, lawyers or trades union officials they have no idea how business works. To outsiders businesses open every Monday morning and by Friday have made enough money to pay staff, taxman and there’s enough left over every week for another Caribbean cruise for the business owner! For those who actually run businesses, Monday is the day you wonder how your business is still there, while Saturday and Sunday are the days where you express surprise that your business is still open. We are not putting on the poor mouth but running a small business in Ireland can be a constant struggle to survive.
Ooops, there goes all my profit!
Normal business margins might be 8%. That’s your profit margin. That’s what keeps you going and growing. If that margin is much bigger others come into the business and force down profits. If the margin is much lower your business is heading for a dodgy future. So what happens when your margin is wiped out in two weeks? That’s what’s happening to the many businesses who export from Ireland to the UK? With a 15% drop in the value of what the UK can pay for their goods and services it is the business equivalent of a tsunami. 8% minus 15% is nothing less than a financial tidal wave.
Not just exporters you know…
But the bad news doesn’t end there. During the recession many kitchen table businesses were set up out of necessity, making artisan products – biscuits, breads, sausages and the like. They sold locally and were often supported by the SuperValu food academy and other locally owned stores. How are those small traders likely to survive now that those stores have to compete with British grocers such as Tesco, when both grocer and UK artisan producers suddenly have a 15% price advantage and will doubtless dump their products into their nearest market, killing our Irish producers on price?
Speed is of the essence
At ISME we try to keep the leaden hand of the State away from matters commercial. For this reason we don’t encourage direct emergency cash transfers from the State to struggling businesses. What we do seek, in this case, as a hyper-urgent emergency response, is a low cost lending mechanism that can give these struggling businesses some breathing space to help to adjust to the new reality. Given everything that the ECB hasn’t done to come to our aid in the past, now is their chance to directly aid our still recovering economy by supplying cheap finance to Irish SMEs via an emergency Government fund and speed is of the essence.
We all can help our local businesses by buying Irish locally and support the home team.