|Minister Eamon Ryan, Taoiseach Brian Cowen and Kevin Cardiff, Secretary General of the Department of Finance at the press conference in Government Buildings, Dublin, Sunday, Nov 28, 2010, anncouncing the EU-IMF bailout terms for Ireland. |
Less than a third of businesses in Ireland believe that the Government’s
four-year plan will restore competitiveness and increase job growth in Ireland,
whilst more than half (52%) believe that the plan actually has the potential to
damage Ireland’s recovery.
These findings were released Monday by Ernst & Young, following a survey of
200 Irish business leaders who attended a briefing in Dublin, to discuss the
business and economic impact of the plan.
The European Commission
said on Monday in its autumn forecast that the EU recovery is taking hold
but progress in uneven and despite the Irish debt crisis, it has almost doubled
the forecast for Eurozone growth in 2010. However, the Irish economy will grow
by just 0.9% next year.
The Irish economy will grow by just 0.9% next year compared with a target
of 1.75% of GDP in the Government's four-year plan which was published last
The Commission is predicting a growth rate of 1.9% for 2012, compared with
the Government's projection of 3.25%. The peak year will be 2012, where the
Department of Finance sees growth of 3.2%, falling back to 2.75% in 2014.
There was some positive news for the Government from the Ernst & Young
survey. 83% of respondents expect the 2011 Budget, which is to be announced on
December 7, to be passed by the Dáil when presented by Minister for Finance.
Banking and liquidity remains top concern
The survey also revealed the main areas of concern currently facing Irish
businesses in light of the plan, which was published last Wednesday.
Half of the respondents confirm that liquidity remains their number one
concern following a review of the plan’s details. But, nearly two thirds (64%)
of these same business leaders said they do not have confidence that the bank
bailout package on offer will improve bank liquidity, or allow Irish businesses
greater access to credit in the near future.
In addition to liquidity, around one quarter of all surveyed said their other
top concerns were, the impact of changes to PRSI, and details around proposed
The Government’s four year plan outlined that consumers will face higher
taxes on spending over the next four years, with the top VAT rate set to reach
23 per cent by 2014. The standard rate of VAT, which is charged on most goods
and services in Ireland, will rise by 1 per cent to 22 per cent in 2013 and to
23 per cent in 2014.
Over half of those surveyed (51%) by Ernst & Young, consider that the
proposed increases in VAT will slowdown the potential for economic growth in the
Commenting on today’s results, Kevin McLoughlin, Head of Tax Services with
Ernst & Young in Dublin confirmed: “Restoring confidence is a key priority
right now - businesses are crying out for stability. The Plan is a step in that
direction, only time will tell if it will be successful.”
The findings also confirmed the reaction of many individuals to the massive
changes planned for pensions announced in the Government’s plan, which will make
it far more unattractive for people to invest in their retirement. 75% of those
business leaders questioned believe that the changes announced will alter how
they plan for retirement.