THE SMALL FIRMS ASSOCIATION (SFA) has said that strong political leadership must be shown in order for Ireland to have a strong economic future.

The Spring Economic Statement from the SFA has said that the small enterprises that they represent must be at the heart of government’s economic policy.

The director of the SFA, Avine McNally, said that Irish businesses and consumers had “taken a harsh spoonful of fiscal medicine with increases in excise duties and taxes” and that this had hampered the country’s economic recovery.

“The only way to solve the fiscal and unemployment crisis is through generating economic activity,” she said, adding that small businesses continued to be the “drivers of innovation and a permanent source of prosperity, employment and economic progress.”

Cost of employment

McNally also said that if government wished to continue their job creation strategy, it would have to “do everything” to reduce the cost of employment in 2013.

She went on to say:

Government measures taken since 2010 have already added over €660 million per annum to labour costs, through employer PRSI changes, pensions levy and most recently the changes to the redundancy rebate. The cumulative impact of this has been a 1.4 per cent increase in labour costs, while at the same time both employers and staff in the vast majority of small companies have taken pay cuts.

Credit Access

The association believes that access to credit remains a real issue for small firms in Ireland, with research suggesting that one in four small businesses failing to access sufficient credit which, in turn, have led to investment decisions being postponed.

McNally said that internal processes in banks needed to be improved and that their decision-making rationale needed to be clarified, with businesses being able to able decisions where credit was declined.

The cost of doing business

The SFA said that the cost base of businesses remained largely outside of their control, due to inflation being driven by government decisions regarding the costs of public utilities such as water, electricity, gas and transport.

“As a result any competitiveness gains are being over-ridden by external Government costs,” she said. “When these costs are passed on to the rest of the economy, competitiveness and jobs are lost.”

Small businesses are the drivers of innovation and a permanent source of prosperity, employment and economic progress. It is therefore essential that Government place small businesses at the heart of economic policy.

Read: Small firms being ‘strangled’ by late payments – SFA >