Kelly, SME debt and some bigger fish March 13, 2014Posted by doctorfive in Business, Capitalism, Irish Politics.
Rates! cried Ibec
Rent! cried Isme
Wages! cried the Sfa
Regularly and unopposed since 2008 until Morgan Kelly this week pointed to SME debt. Mark Fielding
The Association called on Minister Noonan to address the fears of vulnerable Irish SMEs and to give assurances that the Irish Government will not allow the ECB to use the Irish economy as an example of strict deleveraging
Perish the thought.
It is just not sufficient for Minister Noonan to ask Prof Kelly to chat to the Central Bank and compare figures. The Minister must be much more forthright and confirm that the SME sector will not be targeted by our bailed-out banks whether under orders from the ECB or not.
Time for the Finance Minister to stand up to the ECB and the market. He will be changing his name to ‘Stop the water tax Fielding’ next.
Last year Fiona Muldoon, formerly of the Central Bank, warned that at least twenty-five billion euro or half the total loans to small and medium firms are “non-performing”. That is just shy of another Anglo and more should the worst of Kelly’s claims come true.
SME arrears throw up complex issues and there is a high-level of property related borrowing. In effect, in Ireland, literally and figuratively, all roads lead to property.
Given 70% of people in private sector employment are employed by SMEs there is a further direct knock-on for these employees (& past employees) into the whole area of household debt and mortgage arrears in particular.
We have had five years of kicking the can down the road domestically and EU level and it probably a reflection of just how many are up to their neck in bubble property that the obvious SME issue has run under the radar for so long. The austerity agenda was a convenient parallel for all concerned. No one wants to peek at the horror below. It runs right across eurozone, multiples of the kind figures we have quickly gotten used to.
That 70% figure of Muldoon’s relates to another point of Kelly’s where he noted that Ireland is “peculiar” in having lots of multinational and very few large Irish companies. It’s almost as the country has been run in the interest of a very small few.
Last month on Primetime we had the usual adversarial debate on wages increases and tax cuts but I wondered how many at home would notice that it was much venerated entrepreneur vehemently opposed to private sector workers taking home more pay. Similarly, as lobbying is back in fashion, it is worth drawing attention to this story from 2012. Ireland First, an all star cast
Michael Berkery, John Bruton, Leslie Buckley, Pat Cox, Dermot Desmond, Frank Flannery, Ray MacSharry, Denis O’Brien, Sean O’Driscoll, Michael O’Flynn, Mike Soden, Michael Somers, Dick Spring, Peter Sutherland, Brendan Tuohy
One item of particular concern was upward only rent reviews, something almost unanimously acknowledged to have cost thousands of jobs up and down the country.
[A] discussion document to be submitted to Taoiseach Enda Kenny by Ireland First by a high-powered group of the country’s most successful businesspeople who came together last autumn to try to think of ways to restore Ireland’s economic fortunes.
Outside of Nama’s remit, but still in the area of property, the same source said the new Government needed to move to end the uncertainty surrounding the future of upward-only rent reviews for commercial premises. Under the Programme for Government, the Coalition has given its commitment to end upward-only rent reviews for existing leases.
Commenting on this, the source said: “The rent review issue has to be addressed now. The uncertainty surrounding this is having a serious and direct impact on our potential to attract foreign direct investment. Nobody wants to put their money into commercial property in a country where the goalposts can be moved overnight.”
Michael Noonan had removed this ‘uncertainty’ on budget day the year before citing advice from the Attorney General. “Susceptible to constitutional challenge on a number of fronts” but ongoing pressure saw government suffer defeat in the Seanad just last month and Fergal Quinn’s Bill on the issue now heads for the Dáil.
So who was it doing the leg work against the great many hardpressed, downtrodded, real world, lifeblood, private sector SME?
It is understood that the co-chairs of Ireland First — One 51 chief executive Philip Lynch and Rehab chief executive Angela Kerins — will lead the various delegations once meetings can be agreed with Taoiseach Enda Kenny and the Government.