During the National Economic Dialogue (NED) conference on Monday, it was revealed that an average of two businesses in the Republic were forced to shut down each day last year due to increasing costs. According to David Broderick from the Small Firms Association (SFA), 85% of all closures were small businesses.
He expressed uncertainty over when these figures would stabilise or diminish owing to imminent policy shifts projected to increase operational costs in this sector by 36% by 2026. 11,700 companies having no engagement to settle their stockpiled debt with Revenue may also hint at further business closures.
While business attrition is routine, Broderick emphasises a crucial distinction between natural business failure and shutdowns provoked primarily by budgetary constraints.
Several factors have caused a surge in operating costs for small and medium-sized businesses recently. Workers are demanding higher wages to offset elevated living expenses, while energy costs have surged. Moreover, the revocation of the lower VAT rate has impacted the businesses negatively.
This is especially burdensome for labour-intensive sectors like hospitality which has seen a wave of restaurant closures. Corporate bankruptcies increased by 41% to 223 in the first quarter year-on-year, based on recent data from PwC Ireland.
Ireland’s housing crisis was also a focal point of discussion at the NED conference at Dublin Castle. Reports from breakout sessions on housing highlighted the challenge of providing sufficient, sustainable and affordable housing for all economic sectors of the population.
Several industry group representatives praised measures like the new development levy waiver, designed to boost output, during a session chaired by Housing Minister Darragh O’Brien. However, others raised concerns about the long-term effects of the Help to Buy tax rebate and the First Home scheme, which some argue only prop up prices in the long run.
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