Chambers Ireland, the voice of business throughout Ireland, today (27th September 2022) warns that Budget 2023 must be flexible. Government needs to be able to respond quickly, and where needed, to the impact of the escalating energy and inflation crisis.
While the immediate effects of energy costs are significant, the knock-on effect will raise challenges. Where large employers move to shorter working weeks, we are likely to see a large impact on disposable income, something that is particularly likely to affect regional areas.
Manufacturing, retail, food producers, and the hospitality sector are all likely to be seriously impacted by the energy price hikes, often these sectors are the large employers in our smaller towns and rural areas.
For businesses in our cities and large towns, attracting and retaining staff remains the most critical issue. Greater Local Authority supports are needed to deliver housing directly.
The business-to-business sector is likely to be more vulnerable to a wider economic slowdown than the direct impact of increased energy prices. Predicting where the pain will be felt in advance will be a challenge, therefore Government must ensure that monies can be directed to where they will be most effective as the problems across our economy emerge.
To minimise the knock-on economic effects for businesses and the income effects on households, Budget 2023 should see the reimplementation of an EWSS style support for businesses which are struggling as a result of energy price increases that are in sectors with high employment levels.
Speaking in advance of Budget 2023, Chambers Ireland Chief Executive Ian Talbot said: “The impact of energy prices is having a catastrophic effect on businesses where energy makes up a large part of their cost base.
“Many business owners are facing difficult challenges regarding reducing their opening hours to match lower consumer demand, while manufacturers are reducing the number of shifts their operations conduct on a weekly basis.
“It is likely that some businesses, where energy costs are the most significant part of their cost base, will need to close over the winter.
“For Budget 2023 Government should focus on employers where the viability of businesses is threatened by the energy shock.
“Government need to ensure that as the situation evolves into the new year, they have the economic fire power available to them so that policy can be adapted to deliver supports where they are needed.
“Government also faces the difficulty of ensuring that the National Development Plan and Housing for All can meet their targets in spite of the higher cost of delivery.”