Small Business Column: Growth figures come with caveats

Today, Kehlan Kirwan looks back on a good week for Ireland, with a number of job announcements and positive growth figures suggesting the economy is powering up. Kehlan argues, however, that all is not what it seems.

What a past week it has been for the prospects of jobs in Ireland. Three hundred jobs were each announced by Uber and Amneal Pharmaceuticals in two separate announcements.

Those represent 600 jobs over the next few years for Limerick and Cashel. Good news for Ireland, great news for the Mid-West in particular.

Those announcements were quickly followed by news that the economy surged by 5.2% last year and had continued to expand by 1.4% in the first three months of this year.

For Limerick it fits into its vision of its future, as Kieran Harte from Uber told me during the week: “We were struck by the vision that the city had for its future. We saw a great potential not just economically within the area but culturally within the city.”

For Tipperary it was confirmation that the pharmaceutical industry is happy to call it its Irish home. Several high-profile pharma and medical device companies have set up within the county. That, combined with the agri-business and food production firms, appears to show that the county is attracting a wide range of investments.

The growth figures are impressive. They led to many analysts scrambling to update their forecasts. Many economists pencilled in GDP growth numbers of over 5% for this year and in 2016 too.

So for the moment we’re in a purple patch. Ireland is garnering a reputation for business and growth. On the outside we’re looking good. On the inside a few caveats still appear.

Between the two main banks it is estimated that nearly €8bn in lending to SMEs is impaired.

The issue has dropped under the radar, but needs careful attention.

Then there is the huge borrowings linked to property and development land. Outside of Nama, around €40bn in loans still exist connected to investment property or development, again with the two pillar banks.

Recently the National Competitiveness Council (NCC) poured some cold water on Ireland’s economic performance. It argued that Ireland’s growth has benefited from the pick-up of the global economy and from some exceptionally positive tail-winds too. Low energy prices and the drop of the euro which has made exporting to Britain, in particular, so competitive for Irish firms have contributed a huge amount to boosting investments and jobs in Ireland.

I looked at some of these issues last week. The NCC said that Ireland is still a relatively expensive place to run a business.

It also pointed out that investment is needed in broadband, transport and energy. And the labour force is not as well-educated as we might like to think.

NCC chair Peter Clinch said: “Ireland’s continuing competitiveness is under threat, and there are indications pressures are already emerging which are undermining our ability to compete internationally.”

While there is no doubt that we are continuing our climb up from the rockface, major challenges lie ahead. The problems of the past have not been solved.

Closing our eyes and hearing all the good and failing to analyse helped bring Ireland into the financial abyss in the first place. Let’s not forget there is still a mess that needs mopping up.