Negative overall inflation disguises the rapid growth in business costs.
Competitiveness a larger threat to exports than Brexit.
At the release of the latest CSO Inflation Figures today (12th November), ISME, the Irish Small and Medium Enterprises Association, warned that rising state influenced business costs are hampering the export competitiveness of SMEs. The Association, once more, drew attention to how the negative overall inflation figure is currently concealing a huge increase in the cost base of SMEs.
In October the Consumer Price Index was -0.2% in the year and -0.2% in the month.
ISME Chief Executive, Mark Fielding commented, “The cost of doing business in Ireland is crippling SMEs and hindering the economic recovery. Irish SMEs pay much more for basic services such as energy, insurance, local charges and legal fees than their European counterparts and are expected to be able to compete in the export market. Compounding all of this is the pending increase in the National Minimum Wage and the knock on wage pressures that this creates. Plans to create an export led recovery will never come to fruition, if we don’t bring state influenced business costs into line”.
“The threat of a possible Brexit is acting as a distraction from the real issues affecting business. We must do all we can to reduce our costs. Restoring Irelands cost competitiveness is a prerequisite for enhancing our attractiveness as a place to do business, not just for foreign direct investment but for our own indigenous enterprises.”
“In the coming months politicians will make populist uncosted promises to gain votes. However, their key focus should be on creating the type of business environment that will allow businesses to grow.”
The Association called on the Government to:
Ensure that all state imposed business costs are benchmarked internationally.
Address the costs in which they have influence; energy, telecom, transport, insurance and exorbitant legal fees.
Reduce employer labour taxes to promote job creation.
Reduce public sector costs by addressing the increments, perks and inefficiencies.
“Ireland is quickly losing the small gains it has made in terms of cost competitiveness and our election focused politicians have taken their eye off the ball. Government influenced business costs must be reduced if we are to see continued recovery in 2016″, concluded Fielding.