What To Expect From The Budget
While December could be a busy period for a number of the country's small businesses, some operators will have one eye on the Budget.
The festive period is just around the corner and while this could mean busier trading period's for many small businesses across the country, a number of enterprise owners will have one eye firmly placed on the Budget, which is due to be published on December 7th.
Those hoping that the Budget will be a source of festive cheer had their hopes dashed by Taoiseach Brian Cowen earlier this week after he announced that although the Budget will be more about spending cuts than tax hikes, it will be the most severe in the government's four-year deficit reduction action plan. Mr Cowen said that the government has taken a conscious decision to "frontload" the pain that the Budget announcements will bring, saying the move is necessary for the long-term health of the country's economy.
"It is the government's judgement that while a degree of frontloading may dampen economic growth in 2011, it will give the necessary confidence to the international markets and secure our funding position," he said.
The Taoiseach warned that organisations looking to oppose any reforms announced by the government will have a detrimental effect on job creation and the economic environment.
"If vested interests wish to oppose reform, all they will be doing is helping to deepen our problems. If they proceed with that approach it would be helping to condemn our society to persistent unemployment, deteriorating public services and reduced support for the most vulnerable in our society," he added.
The comments followed the publication of a report by KBC Bank, which showed that business confidence has dipped ahead of expected cuts to be announced in December, the Irish Examiner reported. Despite a recent stabilisation in business levels and the likelihood of further improvement before the end of the year, the study showed that businesses are becoming "increasingly worried and fearful" about the economic outlook.
According to Austin Hughes, chief economist at KBC Bank, this dip in confidence is likely to lead to the postponement of spending and hiring at a number of Irish firms.
"As many as five out of six companies feel heightened macro concerns will translate into poorer conditions for their business," he told the news provider.
"Opinion is divided as to how large the upcoming budget adjustment should be," he added. "While the majority of businesses feel more aggressive action is called for in Budget 2011, a sizeable 31 per cent feel cuts greater than €3 billion shouldn't be attempted."
Small businesses across the country could however, be encouraged by calls from the Irish Exporters Association (IEA), which said the December Budget must avoid any taxes on the sector. Furthermore, John Whelan, IEA chief executive, said the government should introduce measures to speed up growth in the industry, RTE News reported. The expert told the news provider that the government should place the same emphasis on boosting the export sector as it has on restructuring Irish banking.
"If the government is able to give equal priority to export expansion the IEA believes that this will engender greater confidence in Irish industry, consumers and in the international arena, amongst investors and suppliers," he commented.
Despite the government warnings and a certain deal of industry trepidation, business sentiment among the country's small firms has increased in the last year. Figures from the Small Firms Association's (SFA) latest survey showed that 31 per cent of enterprises feel their own business is either "good" or "very good". However, Avine McNally, acting director of the SFA, said that the content of next month's Budget will play a major role in whether or not this trend continues.
"This survey shows that small business sentiment has improved, however their confidence remains weak and will remain so until greater clarity and certainty is provided by government in regard to the economy and content of Budget 2011," he commented.
"Government needs to ensure that they assist small firms build on this positive sentiment by creating a business environment conducive to small business survival and growth. They must put jobs and enterprise centre stage."
So, will this Christmas be a time to remember for all the right reasons for Ireland's small businesses? Only time will tell.
Posted by Emily Smith
