IBEC wants credit guarantees for viable small firms as output increases

EMPLOYERS’ lobby group, IBEC has called on the Government to introduce a number of short- term measures — including credit guarantees for viable small firms — aimed at underpinning the competitiveness of Irish firms which are most exposed to sterling weakness.

The call was made on the back of new figures from the Central Statistics Office (CSO), yesterday, which showed a 2.7% year-on-year increase in production rates in the manufacturing sector in November.

IBEC chief economist, David Croughan said that despite the improved November figures — production was also up by 10.7% on a rolling month-by-month basis — last year was a difficult one for manufacturing industries here, with total output increasing by only 1.5% in the first 11 months of the year compared to a near 8% rise in the corresponding period in the previous year.

“The continuing credit crunch and adverse exchange rate movements, especially against sterling, require urgent action from Government to stem a further loss of jobs,” he said.

Supporting IBECs view that November’s figures were not a sign of an overall recovery, Alan McQuaid, chief economist at Bloxham Stockbrokers, said that 2009 could see an overall annual decline in production.

“Although there’s every chance that manufacturing output will post a marginal increase in 2008, conditions are likely to be a lot tougher in 2009, with every chance we’ll see the first annual decline in production this decade,” he said.

He added that the high profile job cuts at Dell’s manufacturing plant in Limerick was a “stark reminder” that the Government can’t afford to rely on multinational investment alone.

“Assuming that just because the country has a low corporate tax regime we will continue to attract foreign direct investment is extremely misguided, to say the least. Of course, maintaining an attractive corporate tax regime is important... but Ireland needs to remain competitive and we can’t afford to price ourselves out of market with high-wage costs especially when demand is slowing and price pressures are easing,” Mr McQuaid said.