SMEs unhappy at government policy

SMEs have become more dissatisfied with the Government since the turn of the year, with many citing the abandonment of annual lending targets for the pillar banks and a perceived failure to address rising business costs as the main reasons.

The latest quarterly SME/Government Satisfaction survey from small firms lobbyist, Isme, shows that despite support for how the Government has been tackling the jobs issue, confidence amongst firms surrounding banking and costs issues is more shaky.

Overall, the index showed a reading of -32 for the first three months of this year; up from -30 for the last three months of 2013.

However, the December survey did show a marked improvement from the autumn 2013 survey, which measured a -42 satisfaction/ dissatisfaction reading.

“Recent modest improvements in job figures are noted. However, the continuing creep of business costs and the lack of adequate bank credit have negatively impacted on the overall rating. This is starkly reflected in the retail response, with the highest dissatisfaction figures noted in 15 months,” said Isme chief executive, Mark Fielding.

The costs satisfaction reading remained relatively stable, albeit high, at -68 points, but the rise in negative feeling regarding government banking policy — from -61 to -65 points — was a marked cause for concern.

“The indicators show how SMEs rate the Government in the first quarter of 2014, with the highest dissatisfaction being shown for the Government’s handling of the business costs and a deterioration in the score for banking issues; a quick answer to [Finance] Minister Michael Noonan for prematurely scrapping the lending targets for the bailed-out banks, in January,” Mr Fielding

While the annual SME lending targets have been discontinued, the Department of Finance and the Credit Review Office have stressed that the level of scrutiny regarding the main banks’ lending behaviour hasn’t suffered.

However, Mr Fielding said that the negative satisfaction rating on banking policy is a direct reflection of both the dropping of official lending targets, and an increase in loan refusals, as reported in Isme’s bank watch survey, which was published a fortnight ago.

“Government must tackle the key issues of business costs and bank credit and prioritise the restoration of our competitiveness. All costs, including public sector and legacy business costs, must be benchmarked against our immediate international competitors.”