The Irish Exporters Association, said today, that the Government’s full armoury of financial tools, including EU state –aid measures, must be combined with any proposed new Budgetary measures to prevent further export and associated job losses. It called for a €1 billion support package.
Foreign-owned firms, mainly American, are responsible for 90% of Ireland's merchandise and service exports.
The failure of the Government to build an adequate contingency fund for poor economic times, is evident in the challenge, which a demand for €1billion would pose, given the stark political choices of cutting spending a raising taxes during a brutal recession.
Ulster Bank economist Lynsey.Clemenger, said today that the Live Register total now stands at 352,800, the largest on record. Compared with a year ago, the total is up 165,000, or almost 90%. Given that we estimate that each additional 10,000 workers on the live register costs the exchequer about €150 million in social welfare benefits and lost tax revenue, the cost so far has been on the region of €2.5 billion.
The IEA says a State-aid package of approximately €1 billion would be required to give the sector the support it would need to the end of 2010. A package of this magnitude would be essential to support market retention measures exporters would have to undertake over the next 2 years and would be in line with State aid packages being offered in other EU member states measured on a pro-rata level being.
Besides the long term benefits of market retention, the IEA estimated the package would save approximately 40,000 jobs in the sector.
John Whelan, CEO of the Irish Exporters Association, said: "“Last week the EU approved Crisis State-Aid schemes for the UK, Germany, France, Hungary, Luxembourg, Austria and Portugal.
The EC approval of the £8billion UK scheme is the first part of the £300 billion package recently pledged by the UK government, much of which awaits further clearance in Brussels. Other European countries have equally large economic stimulus measures planned and approved.
Here in Ireland we have not responded to the deepening economic crisis with any enterprise/export stimulus measures. As a consequence we are now falling further back in the international competitiveness race, while the Government dithers on the issue. The Tanaiste and
Minister for Enterprise, Trade and Employment must, as a matter of urgency, clear a support package with the EC and urgently roll it out to exporters through the promotional agencies.”
John Whelan went on to say: “There is no point in tinkering with small scale measures in the current climate. We are in a full blown recession and we need a fully funded package if we are to prevent major damage to our indigenous export sector.”
“An Enterprise Sustainability Fund of approximately €1 billion, rolled out in line with the EU’s recently released State Aid scheme of up to €500,000 per company between now and the end of 2010, is what is now needed. This would have the impact of saving markets and
approximately 40,000 jobs in the export sector over the next two years.
The EU has approved the use of state funds in this manner, to help businesses facing financing problems because of the credit squeeze, and provide the necessary liquidity to enable them to trade out of the current economic downturn. But we need to move urgently.”
He concluded by saying: “The pace of Government action is of major concern, and is currently causing unnecessary loss of markets and jobs.’’
The IEA noted that the Commission’s temporary state aid framework that gives Member States additional possibilities for providing businesses with improved access to financing during the economic and financial crisis, as amended on 25 February 2009. They are therefore compatible with Article 87(3)(b) of the EC Treaty, which permits aid intended to remedy a serious disturbance in the economy of a Member State.
