Inflation figures disguise business cost increases.
Business rents, bank charges, telecom costs, legal fees and insurance all increasing.
Government has lost touch with business drive for competitiveness.
Review of state-influenced business costs should be priority.
ISME, Thursday 15th January 2015.
ISME, the Irish Small and Medium Enterprises Association, reacted to the latest CSO Inflation Figures today (15th January), with a call for Government to intervene on the issue of rising business costs and to compel energy companies to reduce prices based on the fall in oil prices. The Association also expressed disappointment at the excessive and opportunistic Eircom price increase and warned that rising utility costs and insurance are threatening competitiveness and reducing any appetite for job creation in the SME sector.
The annual CPI inflation figure was -0.3%, with December showing a rate of -0.4%. The annual services inflation is 1.7%, however when private mortgage interest is excluded the real figure is 2.8%.
ISME Chief Executive, Mark Fielding commented on the figures, “The threat of deflation is understandably receiving widespread attention but the problem of rising business costs, concealed by the low overall figures, requires urgent attention from Government. Business rents, insurance and bank charges are experiencing colossal increases. The expected reduction in energy prices is not happening and yesterday’s Eircom price increase demonstrates that Government has lost touch with business and the drive for competitiveness. Consumer demand is improving slowly but the cost pressure on SMEs is unsustainable”.
“The cabinet is reportedly focussing on job creation and assisting small businesses. It is our contention that these two goals could greatly benefit from a robust Government review of state-influenced business costs and subsequent reductions where necessary.”
The Association called on the Government to:
Ensure that all state imposed business costs are benchmarked internationally.
Reduce public sector costs by addressing the increments, perks and inefficiencies.
Address energy, telecom, transport costs and exorbitant fees of the monopolistic legal profession.
Reduce employer labour taxes to promote job creation.
“Ireland is quickly losing the small gains it has made in terms of cost competitiveness. This will have an adverse effect on exports, foreign direct investment and indigenous growth. Government must halt the loss of our competitiveness immediately if we are to see continued recovery in 2015”, concluded Fielding.