‘Banks alone cannot end cash crisis’

THE Irish Taxation Institute wants the Government to adopt measures to help solve the cash crisis facing businesses, 500 of which have failed this year.

“The ESRI, in its latest report, said that the banking system alone will not solve the current liquidity crisis. Some interesting ideas have emerged in Britain, in the general election manifestos, ideas which should give pause for thought in Ireland.

“For example, Finance for Growth Funds, which would channel private equity into growing businesses, the doubling of the Entrepreneurs Relief lifetime limit, resulting in gains of up to €2 million being taxable at the low 10% CGT rate, and a National Loan Guarantee Scheme for business, are amongst the measures being proposed,” institute president Olivia Lynch told delegates on the opening day of the organisation’s annual conference in Galway, yesterday.

Delegates also heard from KBC Bank economist Austin Hughes, who said while the global financial crisis had eased and recovery has begun, “lingering aftershocks” mean businesses and households won’t feel dramatically better off over the next couple of years.

“It has been suggested that we wasted the boom. I’m not sure that is entirely true. However, the key is not to waste the crisis by not making adjustments that can return the Irish economy to a notably healthier outlook,” he said.

“The structure of the Irish economy will have to change substantially because the strong likelihood is that the level of private sector debt will continue to shrink. For some, this will be a very painful process but it would be wrong to conclude that it prevents the Irish economy from growing,” Mr Hughes added.

“Tough decisions have been taken but the next set of decisions we take will determine whether the Irish economy emerges notably stronger or permanently impaired. And the Government faces a tricky task to avoid ‘adjustment fatigue’ while putting in place policies that will help support a sustainable recovery,” he said.