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OUR two main banks are to lend 12 billion to small and medium enterprises over the next two years. Is this a big deal?
These loans are intended mainly for small firms in the export business, despite the fact that large foreign-owned firms account for 90% of Irish exports.
Nevertheless, many non-exporting small firms are essential in the supply chain for large exporting firms. A small firm generally has fewer than 50 employees. There may be roughly 250,000 such businesses in Ireland. If the 12bn were divided between all of them, each would get an average of 48,000.
Could any firm accomplish much with that? Any reasonable profit generated would go to pay bank interest.
On the other hand, if half of the small firms each hired one extra worker for two years at that low wage, it would take 125,000 people off the dole queue.
The exchequer would benefit by roughly 1bn extra per annum in income tax. That would considerably reduce any need to cut public wages.
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