SMEs praised by Central Bank Governor

Philip Lane, Governor of the Central Bank, praised the resilience of Ireland’s small business community at last week’s Irish Small and Medium Enterprises Association (ISME) Annual Conference in Dublin.

Governor Lane pinpointed the string of hurdles SMEs have had to overcome in comparison to large multinationals and the financial stress incurred following the financial crisis.

Data from the Central Bank in 2012 reveals that 40 per cent of credit applications from the smallest businesses were for ‘stressed’ reasons. However, this figure in 2016 had declined significantly to just 13 per cent, suggesting that business conditions had become more stable for SMEs.

During his speech, Governor Lane addressed other important factors within the Irish SME sector:

“Between 2008 and 2012, SME employment levels declined by almost a fifth, which is about double the decline experienced by larger firms during the crisis,” said Lane.

“By 2014, employment in larger firms was just five per cent lower than 2008 levels, while still 15 per cent lower for SMEs. There are many factors which determined the magnitude of the economic shock faced by SMEs.

“SME investment is also showing signs of recovery. Recent research from the Central Bank of Ireland shows that the share of SMEs investing has increased steadily since 2012, and currently about one-third of SMEs are investing, with larger firms, exporters and innovators most likely to invest.”

Irish finance minister, Michael Noonan also moved to reassure SMEs this week that plans to slash corporate tax rates in the US to 15 per cent by president-elect Trump would not damage Ireland’s industrial policy.

“It’s the repatriation of profits that is the primary issue,” said Noonan.

“Now, if you reduce that to 15 per cent, it seems to me that that is not a disincentive for setting up abroad.

“As a matter of fact, it could work the other way because you pay much less tax if you repatriate profits from Ireland in the future.”

Noonan added that he would “wait and see” whether Trump’s plans come to fruition before talking too much on the issue of corporation tax.

“I spent all my life listening to United States election campaigns where there was a commitment to reform corporate tax. I’ve yet to see tangible measures and I was first elected to a local authority in 1974,” added Noonan.

Date published 14 Nov 2016 | Last updated 14 Nov 2016