Economic outlook undermined as businesses turn to examinership

159 jobs were saved through the examinership corporate recovery mechanism in Q2 in both SMEs and non-SMEs, according to new data from the latest Hughes Blake SME Examinership Index.

Where the recession gave rise to a wealth of SMEs utilising the process, today the index makes clear that the businesses availing of examinership are as likely to be large as small.

“Against a backdrop of increasing macroeconomic uncertainty, and in light of the recent surge in jobs depending on the examinership mechanism, now is a key moment to re-evaluate the role the process is playing,” said Neil Hughes, managing partner at Hughes Blake. “Having been made available to SMEs by Government with the move to the Circuit Court, in previous quarters we saw a decline in usage of the process in line with the recovering economy. This trend has been upset recently with a series of companies turning to the process as their best chance of survival.”

As the profile of firms availing of the process has evolved, the European political and economic climate has also shifted profoundly.

The story of Brexit and its full implications for Irish business has yet to be written and while there may be positives for certain sectors from recent developments, the threat it poses to other sectors should not be underestimated.

“Exporting is crucial to our economy’s success, and the danger is that firms that had begun to think about expanding into new markets will now retrench for fear of becoming overextended. Some SMEs who export took the step of hedging against the fluctuating value of the pound, but the vast majority have no safeguard against the situation they find themselves in,” Hughes said.

The impact the economic and political upheaval will have on consumer demand at home and abroad remains to be seen.

“It is too soon to say whether Brexit will directly increase the number of examinerships we are seeing. The question posed over how the border with Northern Ireland will be controlled adds a further element of uncertainty which must be resolved for the good of the economy of the border counties, and indeed the entire island,” Hughes concluded.