A year on and small firms fear what comes next

A year on and small firms fear what comes next

Looking back to our business note a year ago, it is interesting how many urgent issues affecting small enterprises back then remain so this year.

By most estimates, we are 18 to 24 months from the next global downturn. 

The chances of its magnitude being comparable to that of the Great Recession are low, but not negligible.

The US Treasury yield curve has inverted. 

The last “adult in the room” in President Donald Trump’s cabinet has handed in his notice. Oil is falling. Italy remains deep in debt. 

That’s all before mentioning the “B” word: Brexit not merely endures, its effects have worsened.

As you can see, it is difficult to write a business commentary this year without being pessimistic, or political.

Looking eastwards at the meltdown in the UK, it is easy to be conceited at our own so-called political stability But that stability has come at a huge fiscal cost.

In a grim echo of the run-up to the budget of the late Brian Lenihan in 2008, Paschal Donohoe has experienced annual windfalls in exchequer income.

Fine Gael has been swamped with corporation tax receipts which could again prove ephemeral. 

Mr Trump’s wooing of the multinationals with corporation tax cuts is working but hasn’t hit Irish corporation tax revenues, at least not yet.

Current spending increases like topsy. We have to get value for money.

And we have to reform the non-performing health and justice sectors.

But Mr Donohoe, like former taoiseach Brian Cowen in the past, is surrounded by deputies crying for more.

We reiterated our main argument in this year’s pre-budget submission. 

A year on and small firms fear what comes next

If the trade unions choose to grind the country to a halt, let them do so.

But the pain of the fiscal crisis borne in the last recession by the 300,000 who lost their jobs must never be suffered again.

Our hopes for insurance reform remain unfulfilled. 

We pay 4.4 times the amount paid next door in the UK for soft tissue injuries. 

Official figures show a decline of 18% in motor insurance costs since 2016.

It sounds great. But motor insurance costs have soared by over 50% since 2008. 

The legal lobby has played a blinder defending the insurance status quo, running rings around hapless Minister of State Michael D’Arcy.

Social welfare spending in 2011 was €20.9bn. 

There has been no fiscal dividend from reducing our unemployment rate from over 15% to 5.3%. 

Where will the money come from to fund the jobseeker’s benefit or allowance in the next downturn?

December retail sales have been sluggish, with bad weather, Black Friday, sterling weakness, and online sales all sharing the blame. 

A year on and small firms fear what comes next

Hopefully, this weekend will turn the retail tide.

There remain reasons for optimism but tempered with realistic optimism.

It’s a good time to be an employee:

If you are thinking of moving in 2019, pick a business that has built-in resilience, and a workplace culture you can live with for at least five years.

Enterprises that can market their products or services in a post-Brexit EU will likely enjoy a bounce if they can bear the bumps on the journey.

The penny has dropped in Government circles that they’re not doing enough for small enterprise.

The Organisation for Economic Co-operation and Development will formally spell this out next year, and we expect SMEs to get a bigger share of the pie.

Wily economists said the 2007 general election was a good one to lose. 

Will an election in 2019 or in 2020 turn out to be an election more favourable for the vanquished? 

Time will tell.

Neil McDonnell is chief executive of business group Isme

More on this topic

David Cameron cannot be forgiven for Brexit referendum, says Lib Dem leaderDavid Cameron cannot be forgiven for Brexit referendum, says Lib Dem leader

Brexit is only the start of Ireland's problemsBrexit is only the start of Ireland's problems

It’s not easy being green: Boris Johnson’s Hulk metaphor fails to be a smash hitIt’s not easy being green: Boris Johnson’s Hulk metaphor fails to be a smash hit

Boris Johnson: We’ll break out of EU’s manacles like The Hulk if no deal struckBoris Johnson: We’ll break out of EU’s manacles like The Hulk if no deal struck