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PRESS RELEASE: Rebooting the Irish Economy starts with SMEs

By

27/04/2020
  • Thousands of Irish businesses have been starved of cash for almost two months.
  • Ireland has an examinership regime that is too expensive and slow for SMEs.
  • ISME is calling on the Oireachtas to prioritise legislation to allow as many SMEs as possible to avail of examinership protections.
  • Even with the threat of COVID-19, we can’t delay in rebooting the Irish economy.
  • ISME is asking the government to share details of its strategy to reopen the economy and society so SMEs can prepare.

Although COVID-19 remains a significant threat within our society, we need to plan the reboot of our economy now. According to ISME getting Ireland back to work will require three distinct pieces of work:

  1. Irish SMEs need an aggressive plan to supply liquidity.
  2. Weeks without trading has made many viable businesses vulnerable to their creditors. SMEs need affordable access to the examinership process.
  3. We need to see a strategy for businesses and citizens to return to work.

Speaking about the liquidity crisis facing SMEs, ISME CEO Neil McDonnell said; 

‘Thousands of Irish businesses have been starved of cash for almost two months due to COVID-19. The vast majority of these are viable, profitable businesses, which have simply been prevented from trading. These SMEs are risk and debt averse, and therefore putting more debt onto their balance sheets is not a solution to their liquidity problem. 

These viable businesses need grant assistance to keep them afloat until trading can restart. Any debt they take on needs to be on the softest of terms, and at zero or negative rates.’

For those who ask why this sector needs a bail-out, the answer is simple, Irish SMEs have a huge systemic importance to the Irish economy:

  • SME employment provides more than half of Ireland’s income tax, PRSI and USC.
  • SMEs return almost two-thirds of Ireland’s VAT take.
  • SMEs employ two-thirds of workers in the whole economy, and three-quarters of the workers in the value-adding part of the economy.
The reality is that Ireland has no Plan B for the Exchequer if large numbers of SMEs cease trading. Because of this, ISME fully supports the smerecovery.ie plan to reboot the economy.
 
As we know, Ireland has a well-developed examinership regime, to give viable businesses a chance to trade trough trading difficulties. But the current regime is too expensive and too slow for SMEs to avail of.
 
ISME has proposed procedural amendments to our examinership system that would make it more affordable for SMEs. ISME’s proposal is available here.
 
ISME are urging the Oireachtas to prioritise this legislation in order to allow as many SMEs as possible to avail of examinership protections.
 
Finally, Ireland’s medical management of COVID-19 has been exemplary to date. But the long-term maintenance of a social and commercial lock-down is not a viable response to this virus. 
 
We need to understand the Governments strategy to reopen the economy and society, even if it is not possible to give actual dates for actions. Such a plan would detail the first, second, third priorities for opening, the preventive measures that these would entail, and so on. 
 
We believe that society will retain confidence in the Government’s ability to navigate through the COVID-19 crisis, but only if we can see the map.

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Notes: 

  • ISME’s proposal is available here.
  • ISME CEO Neil McDonnell is available for interview
  • ISME should be referred to as the Irish SME Association