SMEs optimistic about 1996 except on export growth


IRISH small and medium-sized businesses continue to be optimistic about the out-turn this year but are a little more cautious than in 1995.

Despite the reduced optimism, Irish firms are much more optimistic than their European counterparts.

On top of this, there is good news for employment with more Irish small and medium-sized firms planning to increase their workforce.

These findings are contained in the fourth annual European business survey, covering 1 7 European countries and jointly published by Grant Thornton International and Business Strategies.

The survey shows that 74 per cent of the Irish firms expect turnover to increase in 1996. This is somewhat down on 1995.

However, the findings are considerably better than 1994 and 1993. Furthermore, the Irish figures are well ahead of the European average of 60 per cent.

When asked about employment 37 per cent of the Irish firms said the numbers employed in 1996 should increase which is slightly up on the 35 per cent in the previous year.

However, the majority of the firms, 57 per cent, expect no change this year while 4 per cent say employment will fall.

Unemployment is expected to be a big political issue this year following the grim unemployment figures for December 1995, published last Friday.

These showed a total of 285,100, a rise of 5,000 from December 1994 and is the highest since March 1994.

The seasonally adjusted figures were 2,900 up on November. Over half of those on the live register are long-term unemployed.

The Irish small to medium-sized firms are more cautious about profitability this year.

Still, the survey shows 58 per cent are looking for higher profitability with 28 per cent expecting the same and 13 per cent opting for lower profitability.

Despite the caution, the figures are much better than the EU average where 41 per cent are looking for higher profitability. 34 per cent expect stable profits and 21 per cent say there will be a decline.

Irish firms are lagging behind EU companies only in their expectations on exports.

Only 21 per cent expect exports to rise compared with 31 per cent in the EU.

These low figures also reflect the domestic orientated trading of most small to medium-sized firms.

Mr Paul Raleigh, partner,

Grant Thornton said while Irish and other European firms are positive for 1996, there has been a decrease in the level of optimism, notably in Europe, compared with this time last year.

"Overall the figures remain positive, particularly in the areas of growth and investment," he said.

The least optimistic country is Germany where small and medium-sized companies are expecting a fall in employment, profitability and prices.

Five other countries Austria, Belgium, France, Luxembourg and Switzerland also expect to see selling price fall in 1996.

In Ireland, only 19 per cent are anticipating a rise in selling prices compared with 37 per cent in 1995.

The survey's findings were based on 5,200 responses to 43,400 questionnaires. In Ireland, 99 companies responded to the 1.000 questionnaires, a 20 per cent response rate.

The survey also revealed that 54 per cent of British companies expect to increase profitability, the highest level in the EU while 33 per cent of respondents believe they would take on more staff during the year.

However, it also showed that 42 per cent of small and medium sized enterprises expected prices to rise