Insurance, Banking and Legal fees increases driving Services inflation.
Government intervention either non-existent or shambolic.
Sterling devaluation can only be addressed by cost control.
At the release of the latest CSO Inflation Figures today (11th August), ISME, the Irish Small and Medium Enterprises Association, called on the Government to prioritise business cost competitiveness, in the wake of the Brexit vote. The Association warned that the pressure on export prices to the UK required a coordinated response from industry and government on all business costs including those influenced by the government itself.
The annual inflation figure was 0.5% while the monthly figure for July was minus 0.2%. The sub-index for Services rose by 3%, while Goods decreased by 3.1%.
Commenting on today’s figures ISME CEO, Mark Fielding said, “We continue to be a high cost economy which is rapidly losing any competitive gains made since the recession. The UK market has become much more challenging for Irish SME exporters, due to the fall in sterling. The one answer is increased productivity and cost control. The concern from SME owners is that the Government has abdicated its responsibility in this area”.
“Government has failed to act in the three main areas affecting business costs; insurance, bank interest and charges and legal fees. In these important areas there is a high-cost situation brought about by the monopolistic and cartel-like practices of the incumbent suppliers”.
The Association called on the Government to:
Ensure that all state imposed business costs are benchmarked internationally.
Address insurance, bank interest, and exorbitant fees of the monopolistic legal profession.
Post Brexit ensure that SMEs are not hampered by labour, tax or regulatory increases, at least while exchange rate difficulties persist.
Stand firm on public sector wage demands.
Reduce public sector costs by addressing the increments, perks and inefficiencies.
Outsource more state sector services to SMEs.
“Low inflation is providing an excuse for administration inactivity. SME businesses are price takers and depend on government intervention when there is market failure. Government intervention to date on insurance, bank interest and charges and legal fees has been either non-existent or shambolic”, concluded Fielding