The future for Irish businesses
Alan Bromell, KPMG’s Head of Private Enterprise, writes about some key themes needing focus to support private Irish business and entrepreneurship as critical pillars of the Irish economy
As Ireland looks towards 2030, indigenous businesses and entrepreneurs face several challenges, from digitalisation and decarbonisation to geopolitical and global economic changes. Despite these headwinds, the latest Global Entrepreneurship Monitor report reveals a strong commitment to entrepreneurship in Ireland, with Ireland ranking third in Europe for entrepreneurs with ‘high jobs growth’ expectations. Ireland’s enterprise policy is more crucial than ever to continue to support investment in Irish businesses, entrepreneurship and family businesses.
KPMG recently made a submission to the Department of Enterprise, Trade and Employment in response to a Public Consultation on the future direction of Ireland’s Enterprise Policy. Here is a summary of some of our views expressed in that submission, which are based on the topics our clients are emphasising in their discussions with us each day.
SUSTAINABILITY AND THE CLIMATE AGENDA
The geopolitical issues that have emerged from the Ukrainian war have highlighted Ireland’s overreliance on imported energy sources and our need for food security. Therefore, ensuring that renewable energy sources power businesses is one of the most critical and effective actions the state can lead to encourage to assist them in their decarbonisation journey. Additionally, we need to ensure our national skills and training mix is sufficient to support businesses in implementing new and innovative renewable technologies. Tax policy can also be a powerful tool to promote sustainable behaviour by companies and consumers when used correctly.
INFLATION
Throughout Covid, the government introduced probusiness supports which served the economy and Irish businesses well. However, for many businesses, the hike in commodity prices, salary costs and energy pose a similar threat. Targeted responses to these challenges need urgent intervention, such as energy subsidies, a business support package for businesses impacted by energy, low-cost loans, and grant schemes. Other options should also be considered to relieve inflationary pressures including making reductions to public transport fares, exploring the feasibility of free public transport at commuting times, and increasing the universal childcare subsidy. On the tax side, a statutory mechanism needs to be introduced to provide for an automatic increase in tax reliefs, bands and credits.
FUNDING HOUSING AND INFRASTRUCTURE
The housing crisis continues to be a defining challenge for the country from a social and enterprise perspective, and appropriate tax policy measures should be considered to increase the housing supply and reduce the housing cost for people living here. In terms of infrastructure, continued investment on a national level is of pivotal importance to our future enterprise policy. Reforms in the Irish planning system could facilitate the efficient realisation of improved infrastructure for Ireland, thereby accommodating strategic employment growth at regional, metropolitan and local levels.
Our experience tells us the breadth of lenders in the Irish market needs to be widened. From an equity funding perspective, we also believe that a wider base of sector specialist private equity and venture capital funding is required. Tax is an important piece of the funding picture and among the measures that should be considered are an enhancement of EIIS relief and amending our capital gains tax code to encourage long-term investment in SMEs by investors and entrepreneurs.
COMPETITIVENESS AND RESILIENCE
Over the past 15 years, indigenous business leaders experienced a banking crisis, Brexit and a pandemic. Another indicator of our competitiveness and resilience has been the appetite for Private Equity, both domestic and international. These inherent qualities of competitiveness and resilience supported with the appropriate policy framework and support from government and stakeholders will see Irish businesses continue to ‘back themselves’ and thrive.
HOW KPMG CAN HELP
Whether you are establishing or scaling a new venture, planning an investment or exit, KPMG’s Private Enterprise teams work across the country to support privately-owned businesses. They can assist you in all areas of business.
Search ‘KPMG Private Enterprise’ to visit our website and learn more about our extensive services for Irish Private Enterprise.