Four-year plan ‘will not secure Cork’s economic future’

CORK’S business community is not convinced that the four-year plan and the budget will be enough to secure the county’s future economic prospects.

In its fourth quarter survey for 2010, Cork Chamber found business confidence on the increase but businesses believe the country will need an additional injection of demand if the economy is to move to sustainable recovery.

Chamber members’ also believe that some default/restructuring of Ireland’s bank-related debt will be necessary to restore the country’s finances to a sustainable footing.

“The survey captures the difficulties faced by the regional economy in 2010 but it also shows that there are strong foundations for growth in 2011,” said Conor Healy, chief executive of the Cork Chamber.

Business confidence has increased with 75% of respondents expressing confidence in the future, which is up nearly 5% on the Q3 figure, he said.

Over 80% of companies do not anticipate staff reductions in 2011, with 41% forecasting an increase in employee numbers in the year ahead.

“Cork’s business community is not convinced that the four-year recovery plan and the budget do enough on a number of key issues,” he said.

Only 12% believe the steps taken to date have resolved the banking crisis and paved the way for a return to a normal banking system, with nearly 70% believing they will prove insufficient.

Close to 80% thought some restructuring/default of bank-related debt will be required to ensure the country’s sustainable economic recovery, he said.

Access to credit remains an issue and 44% disagreed with the Credit Review Office’s statement that the situation regarding bank lending to business was “continually improving”.

To improve the lending environment, 67% said stricter monitoring to ensure banks lend to businesses would be effective or very effective.

Another interesting statistic from the Q4 survey showed 65% of businesses said a new enterprise bank would be an effective or very effective means of boosting the flow of credit to cash starved businesses in the region.

Businesses also called for “new and imaginative ways” to give them ease of access to credit.

They should include ways to encourage people to invest the money they currently hold on deposit.

In the case of local authority finance, Mr Healy said “there has been an increase in support for an annual property tax and for domestic water charging.”

At this point, 69% of respondents said they support domestic water charging (up 13% on the Q3 figure) while support for an annual property or site value tax has increased by 20.6%, with 46% now supporting such a measure.

Views on the property tax are split down the middle, as the survey found 45% of businesses in the region are still against such a move.

Those in favour say revenue generated from such charges should be ring-fenced for local government, with 80% saying locally raised revenues must be spent to support the communities in which they are generated.

“This is particularly important in the context of the reducing central government contribution to the Local Government Fund,” Mr Healy said.