Following the range of key measures announced in Budget 2023, which was presented to Dáil Éireann on 27 September, here is how the grocery retail industry has responded.
Retail Excellence, the largest representative body for the retail industry in Ireland, has given a guarded welcome to Budget 2023, but it has warned that it remains to be seen if the measures announced would be enough to save hundreds of businesses from liquidation before the end of the year. As part of the measures announced in Budget 2023, SMEs will qualify for energy bill payments this winter, covering 40% of the increase in electricity or gas bills. Companies will receive up to a maximum of €10,000 per month. Duncan Graham, managing director of Retail Excellence, said, “We welcome the fact that there has been an intervention in the energy crisis, with targeted supports, and that many people will have more money in their pockets to spend, but we will have to examine the qualifying criteria for the energy support scheme in more detail. It remains to be seen whether this will be sufficient for many businesses who have been crippled by rising costs this year. The war in Ukraine, the sharply rising cost of living, and rising interest rates have led to a huge amount of uncertainty for business owners. It is critically important that the government continue to monitor the impact on the retail industry and intervene again if necessary.” Graham added that retailers faced a number of pending labour costs, such as the introduction of a new minimum wage, statutory sick pay, and pension auto-enrolment. “These additional costs are coming at a difficult time for retailers.”
Food Drink Ireland
Food Drink Ireland (FDI), the Ibec group representing the food-and-drink sector, has welcomed the energy supports announced in Budget 2023 as a step in the right direction, but it called for larger supports over a longer time period. In a statement, Paul Kelly, director, FDI, said, “Energy supports are now central to the sustainability of many food and drink businesses, as they will determine their ability to remain competitive in export markets like Great Britain, where they also face the headwinds of a weakened sterling exchange rate.” FDI also called for the energy supports for businesses to match those in other key EU export markets, so that food and drink businesses can maintain their valuable market positions.
Retail Ireland, the Ibec group that represents the Irish retail sector, welcomed measures in Budget 2023 to offset spiralling energy costs and bolster household finances as we enter the crucial Christmas trading period. The group, however, cautioned that more supports would be needed if the energy crisis continues into 2023. The outlook for the sector remains very challenging. Arnold Dillon, director, Retail Ireland, said, “The new energy support scheme will offset the worst excesses of recent price hikes, but more help will be needed into next year. Without ongoing support, the energy crisis will push many vulnerable retail businesses to the wall. Reducing personal tax and childcare costs will help those struggling with bills and support consumer spending in the run-up to Christmas. It is crucial that people see a way through the current period of high inflation. Today’s Budget provides important relief for individual and household budgets, and will hopefully support a recovery in consumer sentiment. It is disappointing to see the reduced VAT rate for hospitality withdrawn. The measure contributed to the development of vibrant town and city centres. Planned labour market reforms, which will significantly increase employment costs, remain a concern. It is crucial that businesses are provided with more support as they work to manage and implement these far-reaching and costly reforms.” Dillon added, “Crime and antisocial behaviour remain a major challenge in town and city centres. Funding for extra Gardaí is welcome and should be used to ensure a more visible presence on the streets.”
Reacting to the Budget 2023 announcement, Macra noted that the government’s commitment to the extension of various young-farmer tax reliefs – to assist in addressing generational renewal and the challenges of food production and climate change – is welcome. Speaking after the announcement, John Keane, national president, Macra, said that the consistency and continuity of young-farmer tax reliefs is essential to support generational renewal. Macra noted that it had lobbied for the extension of these reliefs and drew attention to the EU’s review of State Aid supports under the Agricultural Block Exemption Regulation, which is due to expire on 31 December 2022. Keane said that it is now critical that the government engages proactively with the EU on the Agricultural Block Exemption Regulation, with a view to getting an increase in the lifetime threshold for young farmers, from €70,000 under State Aid rules to €140,000. “The timing of the review of the Agricultural Block Exemption Regulation remains concerning, as it coincides with the expiry date of the current Irish young-farmer tax reliefs, and therefore must not impact on the orderly extension of [...] young-farmer stamp, stock and consolidation reliefs,” concluded Keane.
Local Enterprise Offices
The network of Local Enterprise Offices (LEO) has welcomed the new supports being made available to small businesses as part of Budget 2023. Padraic McElwee, chair of the network of Local Enterprise Offices, has stressed that small businesses make contact with their LEOs as they plan for the next 12 months. “Small businesses have had to endure several years of hardship through challenges such as the Covid-19 pandemic and Brexit. These have brought much uncertainty to trading conditions. As we now face into the winter of a cost-of-living crisis that is putting pressure on every small business, it is welcome to see that the government will be supporting companies and their significant challenges related to rising energy costs and helping businesses to become more sustainable for the future,” McElwee said. “This will no doubt be of comfort to businesses, but what we would say to any small business is to reach out to your Local Enterprise Office and see what we can do for you. Many businesses can avail of a range of supports that will make their companies work more efficiently, and, in many cases, will save them money. Initiatives such as the Lean, Digital and Green programmes will have a positive impact on most businesses. So, we would ask companies to engage with us. We can work with you on ways and means to adapt your business for the next six months and beyond. We will continue to work with our colleagues in the Department of Enterprise, Trade and Employment, Enterprise Ireland and the local authorities to help small businesses in any way we can over the coming months, and our doors are always open.”
Responding to the 50c increase in the price of cigarettes, John Mallon, spokesman for smokers’ lobby group Forest Ireland, said, “Targeting smokers – many of whom are on the lowest incomes – with yet another tax hike is unforgivable, especially during a cost-of-living crisis. A 50c increase will push the cost of cigarettes to around €15.80 for a premium pack and €13.80 for an average pack. More smokers will buy tobacco on the black market, and that will lead to more smuggling and an inevitable loss of revenue for the government.”