ISME, the Irish Small and Medium Enterprises Association, reacting to the release of the CSO Inflation figures today (11th September), called on Government to address the high-cost business environment, concealed in the low level figures of overall inflation. The Association warned that economic growth was largely dependent on addressing this insidious issue and progress would remain slow and stilted as long as businesses were forced to contend with an uncompetitive cost base.
The August CPI inflation figure was 0.2%, with annual inflation rate of 0.4%.
ISME CEO, Mark Fielding, commented, “In light of concerns regarding the low inflation rate across the euro area, it is difficult to understand how Irish business costs can be constantly increasing for SMEs. Ireland continues to be a high cost business location, with excessive rents, rates, energy bills and local authority charges stifling business expansion plans and job creation. Government must act now to decrease state-influenced business costs which will improve competitiveness.”
“The current administration has been very much focused on generating an export led recovery. However, if our state-influenced costs remain high, the efforts of the private sector will be negated. While the private sector has driven its cost base down through constant revisions, it is imperative that more effort is made in achieving real measured cost and productivity improvements in the areas influenced by the State.”
“The Latest World Economic Forum Global Competitiveness Indicator ranks Ireland at 25 which is far below the UK who are currently number 9. It’s clear we are still a long way from being the ‘best small country in which to do business’ and this lacklustre performance will continue until real reform and reduction of state-influenced business costs are introduced.
The Association called on the Government to use the Budget to:
Review and reduce all relevant state imposed business costs, which should be benchmarked against our main international competitors.
Find faster ways of releasing credit to SMEs.
Address the costs of energy, transport and exorbitant fees of the monopolistic legal profession.
Legislate for upward only rent reviews on legacy leases.
Reduce Public Sector costs by addressing their increments, perks and inefficiencies.
“Restoring Ireland’s 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. This Government must realise that it has an equally important role in achieving cost competitiveness, essential to delivering economic growth and employment”, concluded Fielding.