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Dublin: 11 °C Thursday 2 July, 2020
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Despite some Phase Three optimism, TDs to be told many SMEs are 'dying' due to pandemic

A worrying picture will be painted when representatives from a number of sectors address TDs today.

Image: Leah Farrell

MEMBERS OF THE Oireachtas Covid-19 committee will today hear how small and medium enterprises are “dying”, billions of euro has been “eliminated” in the hotel sector, and Ireland’s arts scene is on the brink of collapse. 

As a swathe of Covid-19 restrictions were eased across the country yesterday, including all domestic travel restrictions being lifted and the reopening of pubs, restaurants and hairdressers, representatives across several sectors will paint a bleak picture of the road to recovery. 

In the first of three sessions of the Oireachtas Special Committee on Covid-19, John Moran of Small and Medium Enterprises Recovery Ireland will this morning call for Government supports in the form of grants to avoid landing businesses with “mountains of debt”. 

“Firms are dying already… the economic epicentre of this pandemic has been SMEs,” Moran, a former secretary general at the Dept of Finance will say, adding that 85% of businesses were forced to close or partially close as a result of Covid-19. 

“We are very worried too that Ireland has massively lagged our European counterparts in the scale and effectiveness of our policy response.”

SMEs, many of which operate in the hospitality sector, are not alone in voicing concerns about the future of their businesses. 

Last week, a survey from the Irish Hotels Federation (IHF) revealed hoteliers expect their occupancy rate will fall by around 40% this year as a consequence of the Covid-19 pandemic and subsequent three-month lockdown of the sector. 

That survey predicted a 62% drop in revenue for hotels in the Dublin region compared to that of 2019, while regional hotels have also predicted a drop of 55% in revenue compared to 2019′s record levels. 

In his opening statement to the committee in Leinster House today, CEO of the IHF Tim Fenn will warn of the “catastrophic impact” the pandemic has had on the industry due to the “elimination of over €5 billion in tourism revenue”. 

Fenn will outline how another €7 billion in revenue is set to be wiped out over the coming five-year period, and that without supports such as a reduction in VAT, some businesses in the sector might not last that long. 

His comments come as Fáilte Ireland, which recently set out protocols to aid in the reopening of the hospitality sector, has launched a new ‘Ireland, make a break for it’ tourism campaign in a bid to encourage the Irish public to enjoy the spoils of domestic tourism while the Government is warning against foreign travel. 

“The overriding priority must be to safeguard the livelihoods of the almost 270,000 people whose jobs are supported by tourism,” Fenn will say, calling for the Wage Subsidy Scheme to be extended.

Pints

There was great enthusiasm for the reopening of pubs and restaurants yesterday, with some Dublin pubs reportedly booked out already – although many without a restaurant licence await the next phase of reopening on 20 July.

But fears linger across the industry that the reduced capacity of pubs due to social distancing, coupled with the prolonged period of closure, is devastating revenue streams for pub owners. 

Padraig Cribben, CEO of the Vintners Federation of Ireland will echo these concerns when he appears before TDs at this afternoon’s meeting. 

Describing the pub experience as essential to tourism, and “unmatched in any other country”, he will call for a reduction on the VAT on alcohol from 23% to 9%. 

“Such a measure would be in step with other EU countries, which are using temporary reductions in VAT to provide immediate support to their drinks, hospitality, and tourism sectors in the midst of the Covid-19 crisis.

“The pub sector is a multiplicity of small family-owned and run businesses. There are just over 7,100 pub licences in the country – 78% of these have an annual turnover of less than €390k from alcohol sales. Less than 6% are in the top licence band with sales in excess of €1.27m per annum.”

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A reduction in excise on alcohol and a commercial rates waiver will also be among the measures outlined to TDs. 

With live music suspended in pubs for now, and with festivals and concerts cancelled or postponed, the Covid-19 pandemic has also driven the arts scene to the brink of collapse, TDs will hear.

“Social distancing measures will continue to mean that events and gatherings are simply not viable. Organisations are losing €2.9m in revenue per month of shutdown,” Angela Dorgan of the National Campaign for the Arts will say in the third of today’s committee meetings.

Dorgan will point to under-investment in recent years as having compounded the impact of the pandemic on the sector and the livelihoods of artists and professionals who work within it.

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