Black economy costing €22.5bn

THE black economy could cost the economy €22.5 billion this year and is threatening legitimate business, it has been claimed.

The Irish Small and Medium Enterprise Association (ISME) has called on the Government to take a tougher approach to what it terms the “dramatic increase” in the black economy here.

Chief executive of ISME Mark Fielding said rogue operators were destroying legitimate businesses and threatening the livelihoods of business owners and employees across the country.

“While the vast majority of companies are trading legitimately, there has been a marked increase in black economy activities and the development of a strong ‘nixer’ culture during the economic slowdown. This is undermining law abiding and tax compliant enterprises, threatening jobs in the process,” he said.

According to ISME, estimates put the black market at 14% of GDP, which would equate to €22.5 billion this year.

Mr Fielding said the nixer culture as well as the attractiveness of the social welfare system here were contributing to the problem and called on the Government to tackle the problem head on.

Meanwhile, chairman of the Small Firms Association (SFA) Dr Aidan O’Boyle called on the Government to “step up to the plate” and deliver a Government backed loan guarantee scheme to ensure that credit flows again to small business.

“Unless the lending risk to the banks is reduced by the introduction of a loan guarantee scheme, many small businesses will not survive.

“We, small business, are the life blood of this country and it is time this was recognised. Time is running out and we need action,” he said.

Dr O’Boyle also called on the Government to rein in runaway costs.

“Now it is time to resolutely tackle costs by forcing further reductions in electricity and gas prices to bring us in line with at least the EU average.” he said.