Dublin Chamber has welcomed Budget 2021 as an urgently needed support package which will bring relief and assurance to many struggling businesses.
However, Dublin Chamber has cautioned that further measures will be needed in the upcoming National Economic Plan to stimulate investment in Ireland’s ailing SME sector.
Dublin Chamber, which represents 1,300 companies in the Dublin region, welcomed the newly announced Covid-19 Restrictions Support Scheme, which will see grants of up to €5,000 per week made available to businesses that have been forced to close or that have suffered a drop of 80% in turnover. The Chamber said this new measure will provide a vital lifeline to many of the businesses worst impacted by Covid-19.
Dublin Chamber ‘s Head of Public Affairs Fergus Sharpe said: “It is vital that businesses in tourism, hospitality, and the other worst-hit sectors, have a roadmap for business survival over the coming months. The grant scheme announced this afternoon has the potential to be a valuable lifeline for the most badly impacted businesses as we head into a very difficult winter. The decision to waive commercial rates for the remainder of 2020 is a significant help and the decision to drop the VAT rate for hospitality and tourism will also be welcomed.
“The extension of the Employment Wage Subsidy Scheme into 2021 will come as a particular relief to many businesses still reeling from a collapse in revenue. There was real concern that SMEs would face a cliff-edge in terms of State support at the end of April 2021, but the Government’s pledge in Budget 2021 offers important assurance in this regard,” said Mr Sharpe.
Dublin Chamber also gave a warm welcome to the new health package announced in Budget 2021, describing it as an investment in business security.
Mr Sharpe said: “The €4 billion health package should be seen an investment in both the economy and society. It is critical that this is used to put in place a comprehensive testing, tracing, and isolation system to allow for a more refined response to Covid-19 where possible and to keep further economic disruption to a necessary minimum. The absence of sufficient data on the sources of infections appears to have left policymakers with few options in recent weeks. However, intermittent blanket shutdowns on a precautionary basis may not be sustainable in the long term. Six months into the pandemic, businesses are asking for a more advanced approach which would facilitate, for example, more localised lockdowns based on clear evidence about the sources of outbreaks and clusters of the virus. Government provision for testing and tracing has not yet been adequate to support this, but we hope package announced today will be a game-changer.”
National Economic Plan must boost investment in enterprise
Dublin Chamber cautioned that the Government will need to do more to boost investment in indigenous SMEs, saying that more detail is required on the proposed equity investment fund.
Mr Sharpe said: “Helping Ireland’s indigenous business base to recover and grow will require a boost in investment in SMEs. The ESRI identified a significant investment gap in the Irish SME sector in a joint study with the Government several years ago, estimating that the gap amounts to over €1 billion annually. The situation has deteriorated drastically due to Covid-19, with estimates of the revenue shortfall facing SMEs at the end of 2020 ranging from €10.3 billion to €15 billion. However, Ireland’s current tax regime undermines efforts to promote investment in startup SMEs as opposed to larger blue-chip firms.”
“The business community was hoping for a serious plan to stimulate investment in Ireland’s SME base, and this afternoon it is still seeking assurance. The new equity investment fund promised by the Government is welcome but there is no timeline for delivery. It is vital that the upcoming National Economic Plan includes a serious commitment to address the investment gap affecting SMEs. In particular, further improvements are needed to Ireland’s Capital Gains Tax regime and enterprise supports such as Entrepreneur Relief,” said Mr Sharpe.