SMEs upbeat despite credit access slowdown

SMEs have seen a slight erosion in credit access in the past three months, but are still more satisfied with the Government’s management of the economy than at any stage in the past three years.

According to the latest Government Satisfaction Survey from Isme, small and medium-sized firms are pleased with the Government’s overall performance, the general rating going from +2 to +11 in the final quarter and reaching its highest level since the survey started in 2012.

High business costs, access to credit, and the Government’s handling of the banking system remain the big bugbears.

Responding to the latest survey, SMEs (particularly micro-businesses) said while access to bank lending had improved, an increase in declines was notable in recent months.

That said, the ‘banking satisfaction’ rating only marginally widened, from -47 to -48.

The rating regarding business costs widened from -47 to -52. This issue is by far the highest-rated reason for SME dissatisfaction with current Government policy, across most sectors.

“Business costs must be reduced and Government must focus on this area if we are to regain our competitiveness,” said Isme chief executive, Mark Fielding.

“The recent pre-election promises are causing consternation among the business community who will bear the brunt of these costs. Jobs will not be created when costs are rising and bank credit is difficult to access.

“External factors continue to assist the economy and the growth rate reflects this. Favourable exchange rates, growth in our major export countries, and low oil prices have given us a boost as we come out of the recession.

“While we can benefit from these factors, they are completely outside of our control.

"The factors within our control — business costs and access to finance — need much more work by Government and, if not addressed, will cause untold damage as the economic cycle unfolds.”

On a sectoral basis, SMEs in the services sector are the least satisfied with Government at present. Hospitality, distribution, and construction firms are most content with current policy.

There was a large rise in satisfaction with the Government’s handling of the employment issue, from +9 to +22.

Isme said it is concerned Ireland is “rapidly” losing its competitive edge.

“We have continuously called on Government to conduct a review of all business costs to bring them into line with our main export competitors,” said Mr Fielding.