SMALL FIRMS EUROPE-WIDE FACING TOUGH LENDING CONDITIONS - Today is EU Finance Day for small and medium sized businesses. To mark this, the European Commission is holding an event to let companies know about what kind of support and financial assistance is available to them. As we have heard from the Small Firms Association here conditions are still very difficult for small firms, and across Europe these account for 99% of all companies. Figures yesterday showed that the euro zone lost a record 1.22 million jobs in the first quarter of 2009. Many of those job losses are in small firms.
James McGing, who works in Economic and Financial Affairs at the European Commission, says that small firms around Europe have suffered 'an earthquake' in terms of economic conditions and it will take some time to rebuild from the upheaval. He says the main problem facing SMEs is the shortage of funds, with companies facing very great difficulties in finding the necessary finance to keep going. He says that while the European Commission does not have a lot of cash as it is not a bank, it is encouraging financial institutions to make loans and has offered to share their risk. Mr McGing says that banks consider making loans to small business as a risky business and that they are going to lose some money, but the Commission says that it will share some of those risks. He says he hopes this increase the amount of lending to small firms.
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MORNING BRIEFS - The head of the IMF has warned that it is too soon to talk about rolling back stimulus spending, saying the world economy has yet to weather the worst of the recession that has hammered industrial output and claimed a record number of European jobs.
*** Figures yesterday showed that 1.22 million jobs were lost in the first three months of the year in the euro zone. In the US, a report on New York state factory activity showed manufacturing slowed again after some improvement in recent months. IMF chief Dominique Strauss Kahn says the world has to exit the crisis before before thinking about addressing government deficits.
*** The European Central Bank has warned that the banking sector still faces risks, despite the unprecedented steps already taken to get credit flowing. In its Financial Stability Review the ECB said risks for financial stability remain high, especially since the credit cycle has not yet reached a trough, and that policymakers would have to be 'especially alert' in the period ahead.
*** Elsewhere, the Irish Stock Exchange has reported a loss for 2008 of €15.5m, as losses on investments doubled to €22m last year. The exchange said the fall in revenue was due to a global downturn in the market for specialist financial products.
*** Profits at Kerry Airport fell by 40% last year after an increase in overheads, mostly relating to a change in the operator of its public service obligation route to Dublin, which required a change in staff, ground handling and emergency services.
*** Oil prices have fallen sharply. Last week it reached an eight-month high of $72.68 a barrel, but for the last few days oil has been falling, hitting $69.86 a barrel overnight when a stronger dollar and falling stock markets helped to push the price lower. Oil prices have doubled since the start of the year because of hopes that an economic recovery could boost demand.
*** On the currency markets, the euro is trading at $1.3811 cents and 84.83 pence sterling.
