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A PARTNER IN one of Ireland’s top consultancy firms has called for more sustainable solutions for the overhang of debt in Ireland’s SME sector to be rolled out.
Joe Carr of Mazar’s said of large SME debts, which are often linked to property investments during the boom:
“Certainly it makes a lot of sense to find some sort of workable solution, so if it’s parked, it it’s written off, whatever it is, SMEs can get back onto their business.”
He continued: “That’s an emphasis that should be brought in and we should work through that overhang as fast as possible.”
Report
Carr was speaking at the launch of a report into the SME sector. It found that the top 0.2 per cent of Irish businesses dominate the Irish market.
If Irish SMEs are to improve their chances of competing, he said they must address several shortcomings.
The report found that Irish SMEs are the worst surveyed when it comes to winning market share from large businesses.
He said that small businesses were hit particularly hard by the collapse of the economy and the level of austerity that was enforced thereafter.
“They simply couldn’t get enough money.”
Recovery
Carr said that businesses have to make an effort to understand their customers better and diversify their offers accordingly to survive.
They also must “build financial strength and resilience – we need to move away from the dependence on banks for short term financing. We need to strengthen our balance sheets, build up our earnings, and perhaps merge.”
He also said that the decline of the construction sector had hit intertwined SMEs particularly hard. He advised that the building trade needs to double in size at the moment, from its current low level of around five per cent of economic output.
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How about reducing all remaining mortgages by 25% for each household as opposed to buy to let?
He is talking about commercial decisions not domestic problems. If people can pay their mortgage which the majority still can then there should be no reductions.
First i’ve heard of Buy to let Mortgages being reduced by 20%??Really???
Would you like to declare an interest Jarlath?
@jarlath So what about those who didn’t take out huge mortgages or those who paid them off? Should they be given money?
How about debt forgiveness for everyone .debt is debt domestic or commercial it reduces ppls ability to spend in the economy regardless
Debt forgiveness should be applied to everyone not just to a minority. I know that we need to support small businesses that’s understandable, but not at the expense of the general population. For small businesses to be profitable they need customers, who in turn need disposable income. It’s a circle break the circle anywhere and it stops working. The government also need to collect the taxes from the big multi nationals, this would easy the burden on the rest of us. No one solution is going to solve are financial nightmare.
A rational and sensible suggestion which recognises reality. The debt may prove irrecoverable anyway.
However doing so would put AIB in the red, which recognise the reality of AIB’s position.
Well if sme are to get debt forgiveness i want exactly the same for personal debt
What about businesses with no unsustainable debt? Why should they be put at a competitive disadvantage to those that invested unwisely and risk the jobs in those businesses? Why should shareholders in a business that made bad decisions benefit from taxpayer funds while those that were not dumb get nothing?
It’s a little bit more complicated than “here is a 25% write off. Now be good next time”. There has to be debt-equity swaps or else there is no incentive for businesses to be well run.
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