Irish companies feeling fall in demand more than those in EU

PRIVATELY HELD companies in Ireland are suffering a greater decline in consumer demand than their EU counterparts, according to new research compiled by accounting firm Grant Thornton.

The research suggests that employment in Irish private companies may fall by more than double the expected EU average.

However, a consequence of the high rate of job losses is that Ireland now ranks first among the 36 countries surveyed by Grant Thornton for access to skilled labour.

“We only have a short space of time in which we can take advantage of this asset,” said Pat Burke, a partner in the firm.

“We will have to create employment opportunities fast in order to hang on to this skilled labour force – skilled workers are generally very mobile and will leave Ireland if we cannot provide jobs for them very soon.”

The research examined business conditions encountered by 7,000 companies in economies as diverse as India, Germany, the US, Britain, France, Japan and Ireland.

While the the fall in consumer demand was viewed as the greatest concern for one third of privately held Irish companies, the comparable level of concern was below that in the EU at large.

A shortage of business credit is of greater concern for private firms in Ireland (25 per cent), than for those in the EU as a whole (19 per cent).

Private firms in Ireland were also more concerned by a shortage of consumer credit (14 per cent) when compared with the EU average (8 per cent).

While the survey found that privately held businesses in almost all countries are less optimistic about economic prospects for the year ahead, Irish firms were considerably less optimistic.

Companies were also found to be considerably less optimistic about the country’s economic outlook compared with 2008.

The level of optimism regarding economic outlook fell by 65 percentage points from 2008 in Ireland, compared with the 72 percentage point drop observed in the EU as a whole.

“Although the economy has been badly damaged, Ireland’s economic growth was not solely based on loose banking practices and a property bubble,” said Mr Burke.

He went to say that any recovery in the Irish economy would have to be driven by privately held businesses. “Access to credit needs to be improved to enable businesses to manage their working capital and long-term funding needs,” he said.

Businesses should adjust to the new level of demand while working on ways to develop product and market share.

“The positives and forgotten ‘fundamentals’ of Ireland (such as availability of a skilled work force, being ‘a good place to do business’ and its support of innovation) need to be communicated, promoted and supported.”