Slow recovery of the domestic economy

ALL may seem rosy in the garden with Ireland being seen as the fastest-growing economy in Europe, based on predictions of as much as 5% growth for this year, but it is mainly driven by the success of export companies, set up here through foreign direct investment by multi-nationals attracted by our corporate tax regime. Quantitative easing by the European Central Bank has caused the euro to fall in value against other currencies and this has provided a further welcome boost for our exports and companies enjoying the bonanza are even able to give their staff pay rises.

Worryingly, however, the story is much different in areas outside the main urban centres where these jobs are. In rural areas, the domestic economy is reliant on small and medium enterprises to lift growth and this is not happening as quickly as people would like, leading to a two-tier recovery.

ISME’s latest trends survey, conducted amongst its members, concluded that ‘the reality for SMEs is that the recovery is glacially slow and patchy’ and that talking up the recovery using GDP figures does not give the full picture and, indeed, masks the reality for smaller companies throughout the country still trying to struggle out of the recession.

Retail figures from the CSO, for February, excluding the motor trade, showed an annual increase in sales of 4.8% in volume, but of only 0.7% in value, meaning margins were cut to the bone to entice people to spend. Unfortunately, this leaves no room for pay increases in the SME sector, causing it to lag further behind the poster boy exporters.