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Ireland's SMEs Fear Rising Business Costs In 2004

by Jason Gorringe,, London

19 December 2003

A new survey published by the Irish Chamber of Commerce has found that the nation’s small and medium-sized businesses are quietly confident about their prospects in 2004, although many are concerned at the rising level of business costs.

The survey, conducted on behalf of the Chambers by MORI MRC revealed that 28% of respondents expect an improved business environment in 2004, whilst 42% think it will be a similar environment to 2003. Over half (58%) of those polled are anticipating higher levels of revenue in the coming year, whilst around 50% believe that income from domestic sales will also increase. Some 61% of SMEs predict that they will retain the same levels of workers next year, whilst 39% are expecting levels of investment to increase.

However, this relative optimism is tempered by the fear of the rising cost of doing business, and 82% of respondents cite this factor as the reason why the general business environment will be worse next year compared to 2003. Also, an overwhelming majority (90%) believe rising insurance will contribute to general cost increases next year, with labour costs not far behind (81%). Just over half of those questioned cited local authority charges as a significant extra cost burden.

Commenting on the findings, CCI President Mark Staunton observed that: “In light of the Government’s policy with regard to local government funding, it is not surprising to note that local authority charges, as a business cost, have increased significantly for many SMEs. In addition, the growing trend of stealth taxes has helped to ensure that largely Government-managed areas such as energy have shown significant increases.”

He added: “Rising labour costs are also a major worry for SMEs and this concern is set to become more acute when the statutory minimum wage is increased further in February 2004.”

“In this context, we are calling for the introduction of the 10% increase in the minimum wage, which has been planned for February 2004, to instead be phased at 5% in 2004 and for the second 5% not to be introduced until February 2005,” Mr Staunton announced.

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