Small Firms Association says outlook positive for rest of economic year

THE Small Firms Association has issued an unusually upbeat forecast for the Irish economy.

The SFA said the outlook for the rest of the year is positive, but it said the Government must be prudent when framing next year’s budget.

It says the next minister for finance should continue with the current economic course set by Charlie McCreevy and not give in to demands for higher expenditure.

“Necessity, quality and value for money are the benchmarks the next Minister for Finance must use for any increases in public expenditure. The major challenge now is to limit the pick up in our inflation,” SFA director Pat Delaney said.

The SFA said in its Autumn economic bulletin that Ireland still faces threats from lower cost economies and it was imperative to keep price and wage pressure under control of risk further job losses.

“The SFA is of the view that any faltering by the new Minister for Finance on the stated Government position to maintain control of public expenditure will be used by business at home and abroad as reasons why not to invest in Ireland. Delivery of extra services without regard to cost, efficiency or effectiveness is not a winning formula to control public expenditure. What is required is urgent and focused management in the public sector, not increases in spending.”

The association said the prospects for job creation are positive with small businesses expected to create 36,000 jobs this year, reversing a five year trend of falling labour demand. Meanwhile, the employers body ISME said its latest survey of businesses shows that the outlook for investment remains positive.

It said the trend in business confidence continues to rise, with 42% of companies more optimistic about business prospects than 12 months ago.

ISME says in comparison to this time last year there has been a relatively high increase in employment in the small business sector, with almost one-third increasing their employment number in comparison to 21% who reduced staff levels.

The overall increase in employment was also reflected in the manufacturing sector, which recorded a net increase in employment for the first time in three years.