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When Planning Ahead, Never Forget the Danger of Recession…

As the summer season enters full swing and we begin to see the summer sale signs crop up in all the high street stores, it would be easy to fall into the trap of believing that Irish businesses are fully safe from the dangers of recession and financial instability for the foreseeable future. As we see consumer spending continue to remain strong, it is easy to overlook the many stores and businesses closing and falling victim to financial difficulty.

Although it has now been many years since the height of the recession and we often find ourselves thinking of it as a long distant memory, it has recently been suggested that the woes of recession may not be as far in the rear view mirror for us as we may like to believe. The CEO of the National Treasury Management Agency Conor O’Kelly has suggested that the chances of Ireland being hit by another recession are 100%. He has suggested that a combination of Brexit concerns, changes to taxation and other thus far unforeseen issues are likely to plunge our small Ireland into another recession in the future.

In terms of having country wide safeguards in place for Brexit, Mr. O’Kelly concluded that Ireland may not be sufficiently protected from the negative impact of worldwide trade around us in the shadow of so much uncertainty. He also suggested that a contingency plan needs to be put in place going forward to better assist us in navigating these issues.

“I suppose whether Brexit, Italy, corporate tax or some other challenge that we have Ireland is a small, open economy, highly indebted, relies on international investors for 90pc of its borrowings. […] People talk about whether the bond market is predicting recession or who’s predicting a recession. I’ll give you a prediction of recession. The chance of a recession in Ireland is 100pc. So, we can’t afford not to have a contingency in place. We have to remain vigilant to that and we do that by having significant cash buffers at all times, smoothing out the profile of the debt to make sure we minimise the refinancing risks in the future.”

It has been suggested while there are some safeguards and rainy-day funds in place, more will need to be done to ensure that we do not leave ourselves entirely vulnerable to threat and that although this prediction seems bleak, that it is not a certainty regarding Brexit etc. Rather it is a suggestion for some point in the future that a recession in Ireland is once again a future inevitability. The possibility of a Hard Brexit however does place us in a precarious position and ensure that as a country we are unfortunately more vulnerable than we would otherwise have been to financial instability.

As always, our advice is to safeguard your own business and finances in any way possible going forward and to remain vigilant of any possible threats.

Should you have any concerns or queries, please don’t hesitate to contact us here at EcovisDCA where we are always happy to be of service.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

The Irish Economy’s Debt Situation

As we have previously discussed, there is still an atmosphere of fear surrounding the possibility of another financial crisis or recession in Ireland. With the news that financial experts predict that it is almost a certainty that another financial crisis will hit Ireland in the future based on current figures, it is difficult to avoid the reality that despite major improvements in recent years, financially speaking Ireland is not out of the woods just yet.

As we are all aware, the debt on Ireland’s shoulders still remains, but recent reports have queried who is truly to blame for the level of debt we find ourselves in? It has been reported that at the peak of the financial crisis, spending was approximately €23billion more per year than what was taken in. The Irish economic debt situation of €205billion has long been blamed on the elusive villain known only as “The Bankers” in that the bailing out of bank debt was the sole cause of the financial crisis, which is not the case in actuality as only just over a quarter of this debt can be attributed to the bailing out of the banks, a figure which stands at €60billion.

In reality we are all aware of the heyday of the Celtic Tiger and its series of mishaps that lead us to the point of no return. Far from the bailing out of the banks being the only cause of the financial collapse, it is estimated that a little over €100billion of the Irish debt relates to governmental mismanagement of public funds, budget deficits and a desperate attempt by the then government to cover for lavish spending and plug a hole in the debt before it inevitably began to spiral. In order to stem the haemorrhage of funds, the government had used windfall tax revenues from the property sector.

Naturally, these funds were by no means bottomless and so when they were no longer available we began to see our budget deficits grow exponentially. It has been reported that at the height of the crisis in 2009, the State was spending approximately €23billion more than it was taking in each year before they began borrowing in earnest which found us in the midst of massive debt.

As we discussed recently, there is always the danger of finding ourselves in this position again, and as such safeguards need to be put in place, in the same way we would suggest safeguarding your business, it is vital that we safeguard our country’s finances. With this in mine, the Irish Fiscal Advisory Council has begun to criticise the government over their spending and has suggested that current spending and debt has “worrying echoes” of the past. It is hoped that change will be implemented and safeguards put in place to ensure that we do not snowball into harms way once more but as always we recomment being vigilant with your own finances and business and ensuring that you are as protected as possible.

Should you have any queries, please don’t hesitate to contact us here at EcovisDCA where we are always happy to help.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

Revenue Commissioners New Debt Management System (DMS)

Onward, to the Future

The past number of months have been a time of increasing change for Irish businesses. From large scale changes to payroll systems to the clamping down of Revenue on all forms of tax evasion and tax fraud. These have been major changes to the ways in which Irish companies do business day-to-day and are hoped to be a solution to some long-term issues facing Irish business life, as it is hoped it will all lead to smoother business operations and less issues facing the Irish tax system.

The season of change continues onwards as it was recently announced that The Revenue Commissioners were set to release a new system for debt management, one which will be more technologically advanced than previous iterations and which will assist them in chasing down more unpaid tax, particularly in the sector of SMEs (Small and Medium Enterprises).

Revenue’s new system entitled DMS (Debt Management Services) was launched just recently and promises to utilise high-tech means to target and deal with a wider range of tax payer. Whilst this may seem like a frightening prospect for SMEs, it is in fact a positive step towards ensuring that all Irish businesses are compliant, and that smaller business need not suffer the consequences of the failures of their larger brethren. The system will be able to target businesses and individuals who may previously have been too expensive to identify and pursue.

A spokesperson for Revenue has stated of the new DMS system that it will:

“Deliver significant increased capacity to manage and support compliance and tackle non-compliance” and will “enable Revenue to review customers with lower turnarounds on a more regular basis”.

So, whilst this means that SME’s will of course naturally fall under the Revenue microscope more often than previous, it is a step in the right direction for the future of business in Ireland, as it is set to join the Payroll Modernisation system in making it easier and more transparent for businesses to submit documentation and queries as the spokes person went on to say:

“The new system is fully online, allowing documentation to be uploaded electronically. It gives customers greater flexibility to manage their payment schedule and make certain alterations to suit their circumstances.

We as always advise to ensure that all your documentation and tax files are in order well ahead of time to ensure that you do not face further issues going forward. Should you have any queries or concerns, our doors are always open here at EcovisDCA.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

Taking the Fear out of Arrears

Following on from the economic crisis and the subsequent increase in the cost of living and decrease in available work, many thousands of Irish people have been left in mortgage arrears which is a very stressful and uncertain position to be in. As the country begins to regain its financial footing there are of course increases in finance options, but up until this point many Irish householders may have found it quite difficult to avail of advice on these matters during what is of course a difficult financial time.

Recently, Tánaiste Frances Fitzgerald and Minister for Social Protection Leo Varadkar announced an awareness campaign to promote Abhaile, a free mortgage arrears support service which many of those struggling were unaware of.

This news follows a survey which found that many struggling with mortgage arrears are too embarrassed to tell their family and friends about their ongoing issues. This in itself is incredibly problematic as the weight of these issues alone can cause isolation, depression and other mental health difficulties. As such, it is essential that all homeowners who find themselves in arrears should have someone to speak to. That is the service that Abhaile hope to provide. Tánaiste Fitzgerald has stated that despite falling numbers, there are still approximately 34,500 people in this country in long-term arrears. These are the people they hope to reach with this new campaign as it also emerged that over two thirds of people did not know that there were any services available to them to discuss these issues. Minister Varadkar was quoted as saying:

“It’s our firm hope we’ll bring forward thousands more people who are now in need of similar help. The key message is to come forward and seek the help that you need. Don’t be afraid, help is available at no cost and we’re on your side.”

Whilst the fact that the number of repossession cases has halved in recent years is indeed positive news, it is also essential that those still struggling be aware of all of the assistance at their disposal to ensure that these rates continue to fall in the coming years so that we can see a significant reduction in people feeling alone in these issues. It was also revealed that those in long-term arrears are those least likely to seek advice or assistance as they may feel that their situation is hopeless.

Angela Black of the Citizens Information Board has said:

“What we’re doing is asking members of the public to go out there and take a look around at their family and friends and people who might look ok on the surface but who are struggling behind closed doors with mortgage arrears. They might not realise they have access to this free expert financial and legal advice. Family and friends can play a vital role in encouraging people to look for help”

The Abhaile service has assisted 4,500 people since it became fully operational last October.

The Abhaile scheme is administered by the Money Advice and Budgeting Service (MABS).

Its helpline, which is open Monday to Friday 9am to 8pm is 0761072000.

 

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY