Confidence yet to return to consumer market - IBECTuesday 25 June 2013 16.29
The fundamentals facing Irish consumers are probably a little better than expected, IBEC's chief economist has told the Joint Oireachtas Committee on Jobs, Enterprise and Innovation, but that it has not translated into spending.
Fergal O’Brien told the committee that IBEC would make a formal pre-Budget submission this week.
He said that confidence has yet to return to the consumer market.
Mr O’Brien said that the goods sector is finding export conditions difficult as Ireland’s trading partners continue to struggle, however services exports are trading well.
He also said that there are a number of costs issues facing employers, such as voluntary health insurance and the cost of electricity.
Mr O’Brien said IBEC would have five key messages ahead of Budget 2014.
The first would be the scale of the adjustment required, as IBEC believes that the Government has a choice on this for the first time since the start of the crisis.
IBEC would suggest adjustments worth €2.6 billion – less than the planned €3.1 billion – with no additional tax increases. This would give a clear message to Irish households that the worst of the crisis is over, Mr O’Brien said.
The business group would also hope that the reduced rate of VAT in the tourism sector and the jobs initiative package would be maintained for at least another year.
It would also hope to see employment costs reduced and for the competitiveness of doing business in Ireland to be reviewed.
Finally, Mr O'Brien said that the Government needed to address the domestic entrepreneurial investment climate.
The real growth for recovery will come from the SME sector, he said, and IBEC believes the lack of investment capital and issues around Capital Gains Tax are holding this back.