VICIOUS CIRCLE OF DECLINE CONTINUES TO HIT BUSINESSES - One in every two businesses is in survival mode, with the growth plans of one in three enterprises constrained by a lack of access to finance. That is according to the Business Monitor survey from InterTrade Ireland, the cross-border business development and support agency. It says businesses have seen a decline in sales and cashflow, with a perceived lack of access to finance from the banking system. But only one in 10 businesses has approached their banks for funding.
Aidan Gough, director of strategy and policy at InterTrade Ireland, says that business are experiencing a vicious circle of decline - a decline in customers, a fall in confidence and contraction in cash, with each problem reinforcing the others. Businesses, especially SMEs, are finding it very difficult to break out of this circle of decline. Mr Gough noted that big businesses are in growth mode, but adds that this growth is not creating new jobs. He says the retail, leisure and services sectors are continuing to find conditions the toughest, with retail businesses reporting a substantial drop in footfalls. Today's monitor found that 70% of businesses said banks had simply no understanding of their needs at the moment, this especially applied to the manufacturing industry.
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MORNING BRIEFS - The president of the European Central Bank, Mario Draghi, has warned about the costs of a euro zone break-up. This puts him in stark contrast to his predecessor Jean Claude Trichet, who always brushed talk of the euro's demise aside, calling the suggestion absurd. But in an interview in today's Financial Times the current central bank's president said that if struggling euro zone countries quit the currency union, they would face still greater economic pain. Countries that left and devalued their currency would create "a big inflation" and fail to escape from structural reforms that would still have to be implemented "but in a much weaker position," he said. To fight the crisis, Mr Draghi stressed the importance of unprecedented measures taken by the ECB to shore-up euro zone banks - which include its first ever offer of unlimited three-year loans this week.
*** European Union finance ministers are going to have a teleconference later today, rather than meeting in person. They will talk about a few things today, including bilateral loans to the International Monetary Fund and new fiscal arrangements for the euro zone.
*** On the currency markets the euro is trading at $1.3010 cents and 83.95 pence sterling.
