GEOFF PERCIVAL: SME confidence sinks in first quarter

Confidence amongst small business owners deteriorated significantly during the first quarter of the year, with both domestic and external factors feeding their economic uncertainty, a new report shows.

The latest quarterly business trends survey — covering the three months to the end of March — from small and medium-sized business representative, Isme shows that the positive trends seen in the final quarter of 2015 were effectively wiped out in the first quarter of this year with decreases noted in nine out of the 12 sentiment indicators.

Business confidence and expectations decreased on a quarter-by-quarter basis by nine percentage points and 13 respectively. Business environment and profitability expectations were down by six points to 34% and 10 points to 26% respectively. Both current and expected sales measures were down — by 15 and nine percentage points, respectively, and export forecasts were also down.

“Increasing business costs, the continuing difficulties in accessing bank finance and scaremongering over Brexit have added to the external factors of threats of eurozone deflation and adverse currency movements,” according to Isme chief Mark Fielding.

“The current political situation and the industrial relations landscape is having a major negative effect on business confidence and expectations.

“The inaccurate cheerleading of a ‘major’ recovery at the recent election, quickly followed by exorbitant trade union wage demands and the developing circus over the formation of the next government are major factors,” he said.

Isme wants more state sector services outsourced to SMEs, a reform of the social welfare system to make it more profitable to work, an expansion of SME sector export capacity, improved access to finance for small firms and a reduction in government-influenced business costs to below the EU average, in a bid to restore SME confidence.

Overall, the body said the current domestic political climate is doing the sector no favours.

“The lack of confidence to govern, shown by all parties in the new Dáil, is a disgrace and is having a negative effect on business confidence. With a spring economic statement due within the month, it is imperative that we have a stable government.

“The call to all politicians is ‘get on with it’,” Mr Fielding said.

On a positive note, Isme’s survey shows that firms are planning for growth and investment and current employment levels are rising. But, future employment outlook is poor as SMEs “come to grips with the recent increase in the National Minimum Wage and the incessant wage demands being promoted by the unions, which struggling SMEs simply cannot entertain,” said Mr Fielding.


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