85% of firms in decline, poll finds

Low demand for goods and services is keeping 85% of Irish businesses in decline, according to an all-island survey by IntertradeIreland.

The cross-border group’s Q1 2012 Business Monitor found just 15% of those surveyed are either growing or expanding — just 13% in the Republic, versus 21% in the North. The other 85% are all in decline. Respondents want their governments to reduce taxes and improve access to finance.

IntertradeIreland director of strategy and policy Aidan Gough said: “The fact that after three years only 15% of businesses are in growth mode shows the protracted nature of the situation.

“Demand, or lack of it, still remains a key issue for businesses. Businesses are looking for new markets. Our research shows 25% of those trading cross-border have been encouraged by this experience to explore other export markets. Half of these existing exporting companies are now looking at the EU markets for new sales,” he said.

Mr Gough said IntertradeIreland is trying to lift more companies onto the first rung of the exporting ladder, and give them confidence to seek out opportunities across the island.

Sales performance figures were also negative in the first quarter. Just 22% of businesses reported an increase in sales while 37% saw a decline; resulting in a net balance of -15%. These figures show a slight improvement on the previous quarter when the respective figures for sales increases stood at 18% and decreases stood at 41%.

Almost two-thirds of businesses cite a lack of demand as the main cause of decline. Four-fifths cite rising costs.

These combined issues continue to have a knock-on effect on cash flow, suggesting the rest of 2012 will be a difficult trading environment.

The survey also raises an ongoing issue about access to finance. Some 41% of businesses said a lack of finance for investment is constraining their growth plans, with near parity on both sides of the border. This figure has risen from 36% in the previous quarter.

Significantly, 87% of businesses are not applying for any type of credit. However, in the last quarter, of the 4% of firms that applied for a loan, 53% were successful in securing finance. While just 8% of firms applied for an overdraft, 79% of these were granted.

Mr Gough said: “Though only a small minority of companies surveyed applied for finance, a large percentage are telling us that a lack of finance is affecting their growth plans. Many of those going forward to apply for credit have been successful, and I would encourage businesses to seek out financial support if they require it.

“IntertradeIreland will continue to work with business owners, government bodies, and investors to ensure that we provide support for businesses to help them accelerate their growth.”


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