Ibec warns that struggling SMEs may need extra financial help

“The input costs — due to the increases in energy, inflation, cost of labour, with the impending national minimum wage increases, on top of recent Vat increases, along with many other input factors — will make it very difficult for these businesses in the coming months,” said Ibec executive director of membership and sectors Sharon Higgins.

A new Ibec survey found that costs associated with energy, inflation, and labour were leading concerns in the ‘experience economy’, which includes hospitality, retail, travel, food, drink, tourism, and entertainment.

Commercial customers could see an increase in their energy bills as European natural-gas prices have jumped, fuelled by colder weather expectations and the war in the Middle East, which is putting pressure on the market.

The price of European wholesale gas rose by 3.4%, to €46.58, a megawatt-hour on Monday, before noon, and storage sites are reaching capacity with ample LNG imports, but Europe is still exposed to supply risks after last year’s energy crisis saw Russia curb pipeline gas flows.

Finance Minister Michael McGrath suggested to the Irish Examiner last month that there would be no additional energy cost supports for businesses this year.

“We acknowledge that the cost of doing business has increased significantly, in part because of policy decisions that we have made, that are the right policy decisions,” said Mr McGrath.

Mr McGrath referenced the increase to the minimum wage as another burden for businesses, but added that low-income workers must be able “to pay all of the increased costs in their daily lives from the minimum wage”.

“The most important thing we can do for small- and medium-sized businesses is to underpin a strong economy, putting more money back in the pockets for their customers and making sure there is demand for the goods and the services that those businesses sell,” said Mr McGrath.

However, the Ibec survey showed that 70% of respondents said they were as confident about their business as they were six months ago, but 25% said they expected turnover to decline.

The survey included 328 interviews, while 87% of participating businesses were located outside Dublin and almost all were Irish-owned and family-run.

Ibec recommended that government better co-ordinate labour-market regulation and cost factors, while limiting any further cost-competitiveness measures that could threaten small- and medium-sized business viability and employment.

This area of the economy employs more than 300,000 people, or 20% of the private-sector workforce, and is worth €4bn to the Irish economy, according to the survey.

• Additional reporting by Bloomberg