SME Market Monitor presents broadly positive SME environment, but uncertain times lay ahead3rd October 2017
The latest DKM/BPFI SME Market Monitor, October 2017, prepared by DKM Economic Consultants (DKM) and published today by Banking & Payments Federation Ireland (BPFI), shows that the current environment for SMEs is encouragingly positive, but concerns exist with regards to international factors on the SME environment.
Tracking trends across 15 different indicators which are important for the performance of the SME sector, the latest DKM/BPFI SME Market Monitor shows that the majority of indicators tracked are encouragingly positive. At the same time, it describes the apparent emerging concern about the effect of such factors as Brexit, corporate tax proposals and developments in the US on the Irish economy. In her commentary accompanying the report, DKM’s Annette Hughes concludes that while the economy continues to see notable positive trends in some areas there is no room for complacency, and businesses should ensure they are well prepared as the full effects of external factors continued to materialise:
“Uncertainty in regard to Brexit and the subsequent weak value of Sterling continues to affect the number of visitors coming from Great Britain (GB), with visitor numbers down by 3.1% in the quarter and by 8.6% YoY in Q2 2017. Visitor numbers from Great Britain have been on a downward slope since Q2 2016, which coincided with the Brexit vote. Despite such falls, a total of 2.49 million tourists visited Ireland in Q2 2017, representing annual and quarterly increases of 3.8% and 1.8% respectively. There were also significant annual increases in visitors coming from North America (+22.9%) and Europe (+8.3%). The aftermath of the Brexit vote also continues to affect the Food Production Index, as output in the industry has now fallen in five of the last six months.”
Hughes also points to developments from which SMEs can take encouragement, particularly in the areas of employment, new lending and debt accumulation which remain largely unaffected by external influences:
“Total new lending to SMEs rose to €740 million in Q2 2017, representing a modest increase of 2.8% or €20 million on the previous year. As a result, new SME lending has now expanded in each of the last five quarters. Total outstanding debt accrued by Irish SMEs came to €13 billion in Q2 2017, representing a decline of 12% or €1.8 billion compared to the previous year.
In summary, with Brexit negotiations on-going and with corporation tax proposals and developments in the US, the Irish economy currently faces uncertain times. Nonetheless, at this point in time, the economy continues to perform well in terms of increased domestic demand, positive SME lending and production levels. However, given the unpredictability of these global factors, it is difficult to know whether this shall remain to be the case and to what extent this could impact the SME environment in the medium term. ”
Note: Banking & Payments Federation Ireland is the voice of banking and payments in Ireland, representing over 70 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.
Contact: Annette Hughes, Director DKM Economic Consultants, Ph: 01 6670372
Keira Doyle, Head of Communications, BPFI, Ph: 01 4748835 / 086 269 4460