Latest news with #ConorO'Toole
RTÉ News
10 hours ago
- Business
- RTÉ News
Latest ESRI Report
ESRI'S Dr Conor O'Toole discusses its predictions for the Irish economy given the background of global uncertainty.
RTÉ News
02-05-2025
- Business
- RTÉ News
Small and medium firms investing less post pandemic, ESRI report shows
The scarring effects of the pandemic has resulted in small and medium firms investing less in their businesses, according to the Economic and Social Research Institute. It found nearly 60% of enterprises invested in capital in 2023 compared to 64% before the Covid-19. At the same time there was a significant fall in funds allocated by firms to climate related measures. The report, funded by the Department of Finance, said 18% of companies invested in buildings, 28% in transport equipment and 42% in machinery and equipment. It found willingness to expand operations had decreased slightly compared to 2021 which indicated increased risk aversion among some firms. The report said access to financing as a major barrier had fallen from 34% in 2021 to 27% in 2023. Among SMEs, that obtained a loan, the median interest rate increased from 3.6% to 5.6% in 2023. However, European Central Bank interest rates have been falling steadily since late last year which normally feeds through to interest rates on business loans. Climate and energy-efficiency–related investments fell in 2023, both in terms of the proportion of firms and median expenditure from €34,000 to €20,000. At the same time, the proportion of SMEs indicating that climate change adaptation is important for their business fell across all sectors and all sizes of firms. Dr Conor O'Toole, the leading author of the report, said: "This is concerning given the importance of investment for long-term growth. In particular, a notable fall-off in climate-related investments represents a challenge for the decarbonisation pathway."
Irish Independent
02-05-2025
- Business
- Irish Independent
Investment by SMEs has yet to recover to pre-pandemic levels
Almost 60pc of SMEs invested in capital assets such as buildings and vehicles in 2023, which was below the pre-pandemic level of 64pc, according to a report by the Economic and Social Research Institute (ESRI), which was co-authored by the Department of Finance. The median level of investment by medium-sized firms remains well below the levels of 2019, but some recovery is evident for smaller and micro enterprises. In terms of sectors, construction, hotels, restaurants and retail – which are all domestically oriented – are also at pre-pandemic levels 'suggesting that the impact of repeated shocks has weakened their investment appetite', the report says. The Irish enterprise sector has been hit with external shocks other than Covid-19, including Brexit, the surge in energy costs following Russia's invasion of Ukraine, and inflation generally, which led to higher interest rates. This has put pressure on their day-to-day operations, and led to a lack of certainty around committing to capital investment. In particular, a notable fall-off in climate-related investments represents a challenge The ESRI report says: 'While this hesitancy is understandable, it does come with a long-term economic cost as investment is a clear channel through which long-term productivity can be boosted.' Investment levels per firm have recovered in nominal terms, up from €40,000 to €50,000 between 2021 and 2023. After accounting for changes in price levels, however, this is below the levels recorded in 2019. In terms of fixed capital assets, the report finds that about 20pc of firms invested in buildings, 28pc in transport equipment, and 42pc in machinery and equipment. Relatively few firms, just 5pc, invested in intangible assets such as intellectual property. The largest investments in median expenditure terms were on vehicles (€43,000), followed by buildings (€40,000) and non-transport machinery (€20,000). Dr Conor O'Toole, the lead author of the report, said: 'Investment in SME sectors has recovered compared to pandemic lows. 'However, in real terms, the levels have not reached pre-pandemic peaks. This is concerning given the importance of investment for long-term growth. In particular, a notable fall-off in climate-related investments represents a challenge for the decarbonisation pathway.' The report finds that firms are moderating their expenditure on digital investments and climate action-related activities. Given the big structural change that will be needed to move towards a low-carbon environment, the authors say it is worrying that fewer firms regarded carbon investments as important. There has been a slight increase in the share of firms willing to borrow, up from 43pc to 47pc between 2021 and 2023. This stops the declining trend seen before the pandemic. Supply-side constraints seem to be easing, as fewer firms say access to financing is a major barrier to investment. Between 2021 and 2023, the median interest rate on loans increased from 3.6pc to 5.6pc. Despite this increase, only 6pc of firms surveyed cited high costs as a reason for not seeking credit. 'However, that is still a substantial increase from the 2021 survey, where only 2.3pc of respondents cited high borrowing costs,' the report said. While just under half of firms are willing to expand their operations, the survey found that this had fallen marginally over the period 2021 to 2023, which points towards an increase in risk aversion by some businesses.
Irish Times
01-05-2025
- Business
- Irish Times
Slow recovery of SME investment post Covid ‘concerning', says ESRI report
The levels of capital investment by Irish SMEs had not recovered from the 'scarring effects of the pandemic' in 2023, a study by the Economic and Social Research Institute (ESRI) has found. The report, which was co-authored and funded by the Department of Finance, found that, while 60 per cent of small and medium-sized firms in Ireland engaged in capital investment in 2023, that still lagged behind the pre-pandemic levels. As much as 67 per cent of firms made capital investments in 2017, with the rate holding steady at 64 per cent in 2018 and 2019. 'Investment in SME sectors has recovered compared to pandemic lows,' the study's leading author, Dr Conor O'Toole, said. 'However, in real terms, the levels have not reached pre-pandemic peaks. This is concerning given the importance of investment for long-term growth.' READ MORE Dr O'Toole noted that 'a notable fall-off' in climate-related investments by SMEs represents 'a challenge for the decarbonisation pathway'. The most common form of investment was on machinery and equipment, at 42 per cent, while 28 per cent of Irish SMEs invested in transport equipment, and 20 per cent of firms invested in buildings. Just 5 per cent made investments into intangible assets such as intellectual property or software. On average, firms which invested into these categories spent €43,000 on vehicles, followed by buildings at €40,000 and non-transport machinery at €20,000. The mean level of investment stood at €188,000 per firm, an improvement on €147,000 and €146,000 in 2020 and 2021. While the figure is still comparable to 2019, when firms invested an average of €216,000, once adjusted to 2023 price levels the report says the metric stood lower in 2023. [ Investment in staff slumped 20% in SMEs during Covid - ESRI Opens in new window ] The report found that younger firms, those established less than 10 years, were more likely to invest in capital assets. The study found 'a clear divergence' across sectors in the trends of the likelihood of firms to invest, with growth in export-focused sectors such as manufacturing; transport, storage and communications; and professional, scientific and technical sectors. Domestic-focused industries such as hospitality, retail and construction 'had either a fall or only marginal gain in the proportion of investing enterprises', the study found. Fewer firms reported access to funds as a barrier to investment in 2023 than previously, with 27 per cent of firms reporting it as a constraint to investment compared to 34 per cent in 2021. Minister for Finance Paschal Donohoe, whose department funded the research, said: 'The Government is committed to supporting the SME sector in Ireland. 'This research will add to our understanding of the Irish SME investment environment and prove invaluable to the formation of policy, not only for my department, but a number of other important financial bodies in Ireland,' he said.
