The 'rocky road' faced by businesses as Covid supports end

Almost €7.7bn had been injected into businesses thanks to EWSS by late last month, with firms in accommodation and food services accounting for €1.9bn

Small firms face "a rocky road" as the Government's pandemic supports draw to an end and cost pressures rage because of the war in Ukraine, the business group representing the banks has warned. 

The Banking and Payments Federation Ireland (BPFI) said that the recovery of the accommodation and food services sector, which was among the worst hit by the Covid health restrictions, will be strongly affected because the wages of 70% of staff in the sector were supported by the employment wage subsidy scheme (EWSS).

Surging cost pressures

Surging cost pressures will now make recovery more difficult.   

"The accommodation and food services sector, in particular, is pinpointed as facing significant challenges with activity in the sector at the end of 2021 down by around 15% in terms of value and 20% in terms of volume compared to the first quarter of 2020, a performance which now looks set to be further exacerbated as cost inflation continues to rise and with State supports due to run out in a matter of weeks," the business group said. 

The BPFI said that almost €7.7bn had been injected into businesses thanks to EWSS by late last month, with firms in accommodation and food services accounting for €1.9bn. 

In addition, 95,000 firms tapped the tax debt warehousing scheme for €3.1bn in liabilities, it said.

“With a record number of people in employment, full-year data for 2021 shows the Irish economy grew by 13.5%. 

"However, as our SME Monitor clearly demonstrates, this recovery is not consistent across the board and many sectors, particularly businesses in the food and accommodation services sector, face a difficult road to recovery as we emerge from the pandemic," said Brian Hayes, chief executive at BPFI. 

The economy faces living with higher price levels for some time, said Mr Hayes.