By David Mc Williams
The headline in yesterday’s Irish Independent was eye-catching. It said that half of all Irish businesses are on the verge of collapse, according to stress tests carried out by business and credit risk company Vision-net.
Companies in the hospitality, construction, IT, motor, and wholesale and retail sectors are least likely to survive, Vision-net said. Added to this is the news that five companies went bust every day this month.
This news came on the day that the central bank pronounced that lending to the private sector continues to slide. On an annual basis, lending fell by 3.7 per cent, with mortgage lending down by 2.2 per cent and lending for consumption and other purposes down by 7.9 per cent in June.
Credit for companies also declined, down by 2.9 per cent on an annual basis. Loans to companies fell by €399 million during June, following a decrease of €338 million in May.
We also have new data showing a complete collapse in retail sales last month, more evidence that houses prices continue to fall, news that long-term unemployment has reached 200,000 and four out of every ten people on the dole have been out of a job for over a year. The picture painted by the most recent data, is one of a domestic economy that is grinding to a standstill. Far from recovering, this evidence screams that the domestic economy is getting weaker. People and companies aren’t borrowing, we are not spending and there are debt and cash flow problems emerging everywhere in the local market while long-term unemployment, the most significant indicator for absent demand, continues to rise.
Comment: A excellent article and well worth the read!