The Government said it will expand the mandate of Local Enterprise Offices (LEO) to provide direct grants to firms who employ more than 10 people. The measure is intended to support new exporters and will target companies in the manufacturing and internationally traded services sector. Until now, LEOs were only mandated to support micro enterprises employing 10 people or fewer. The changes announced this week are aimed at streamlining the transition from LEO to Enterprise Ireland supports for business, while expanding the role of LEOs so they can help with further job creation at a local level.
Next year, LEOs will also pilot a capital grants programme for small firms to improve energy efficiency.
While it is certain that small companies looking to expand will welcome the extra supports, the outlook for the economy seems a little mixed, meaning expansion opportunities may become more difficult to find.
The Bank of Ireland economic pulse survey – a barometer of sentiment – for November showed that consumers remain worried about the future, with 56% of those surveyed now expecting unemployment to increase over the next 12 months.
Higher costs are set to weigh on Christmas spending plans as only three in five say they intend to spend the same as or more than last year over the festive period.
Bullishness over property prices is also starting to wane. While 53% of respondents to the Bank of Ireland survey see prices rising next year, almost one in five see house prices falling in 2023.
On rents, only 3% of people saw a drop coming next year. Businesses were more upbeat about the coming months, with service firm, construction and retailer sentiment all improving.
It is no wonder that sentiment is fragile. High inflation throughout this year has already hurt spending. News of layoffs in the high-value tech industry is making people nervous about future employment prospects.
However, it is not all bad news. There are some signs emerging that we may have already seen the peak in global oil prices, which should eventually feed through to energy costs. While house prices may start to ease next year due to higher mortgage costs, there is little sign of any kind of housing crash, which would seriously damage the economy.
Closer to home, the agricultural sector has been challenged by higher input prices, while also seeing product prices generally allow farmers to stay ahead of costs.
Data from the Irish Central Bank shows that borrowing by the agricultural sector is well below the peak achieved in the run-up to the last property bubble, and is holding close to levels seen in the early 2000s.
This is not to say that there won’t be some downturn in economic activity next year. It’s more that signs are increasingly showing a slowdown may not necessarily trigger an actual crisis.