‘Modest optimism’ for SME growth

Recent policy initiatives and market recovery should allow for an air of “modest optimism” around the prospects for sustained SME sector growth, a report suggests.

The fourth edition of the SME Monitor — jointly published by DKM Economic Consultants and the Banking & Payments Federation of Ireland (BPFI), formerly the Irish Banking Federation — highlights the best set of indicators for almost six years, with improvements seen across the board, with the exception of earnings and disposable income.

“The performance of virtually every indicator in the monitor has improved, with the possible exception of earnings and disposable income, which have yet to display signs of recovery. The sustained increases in employment appear to be finally feeding through to consumption as all components of domestic demand increased in the second quarter,” said survey author Annette Hughes of DKM.

The monitor noted a near 56% increase in new lending levels to SMEs in the second quarter, albeit up from a low base, with outstanding debt levels continuing to fall. It added that the retention of the 9% Vat rate for tourism/hospitality service providers, the relaunch of the Seed Capital scheme, increased thresholds under the Employment and Investment Incentive Scheme, and the establishment of the Strategic Banking Corporation of Ireland “can give confidence to the SME sector that there are better times around the corner”.

“The overall package has resulted in a small stimulus for the economy, which will build on the recovery which has commenced,” DKM said.