There are early signs that many SMEs are coming under severe financial pressure, according to financial advisory firm Azets Ireland.
Much of the recent focus has been on the impact tariffs will have on exporting firms and multinationals, and what that may mean for corporation tax receipts.
However SMEs represent the vast majority of firms here – and the bulk of employment too.
According to the CEO of Azets Ireland, the sector is now see patterns that are reminiscent of the post-crash period in Ireland.
“2009 and was the economic crash – that was the real pinch point for the economy, but people don’t really talk about February 2012, three years after the crash,” said Niall Hughes. “That was when unemployment in Ireland topped out at 15.2%.
“If you roll that forward, you can see now that the three year time-lag from when Government supports were withdrawn after Covid. People talk about March 2020 as being the economic shock that Ireland felt, actually it wasn’t – it was two years later.”
He said this problem is not yet appearing fully in official statistics but is forming the basis of many of the conversations his firm is having with clients.
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“We’re in touch with 4,000 SME clients from all walks of life and now we’re starting to see that pressure from them,” he said. “There is more and more stress now for SMEs – those are conversations we’re having.”
Though even in the data that is available, there are some early signs of an issue. Mr Hughes said it is likely a major factor in the modest increase in unemployment that has been seen over the past year.
“If there’s one or two or three people being let go in small businesses, the cameras are not going to be there to see this,” he said. “But this is what we’re seeing – people are talking about restructuring, refinancing, how can they get through to the next stage?”
If the trend continues, he said he expects to see many small and medium-sized companies laying off more staff, with some ultimately going out of business.
To address that he said there needs to be a range of targeted, SME-specific measures in Budget 2026.
That includes a reduction in the VAT rate for hospitality, but also other supports including the establishment of a new semi-State body focused on SMEs.
“They’re looking forward to the Budget, and they’re hoping very much that there’s going to be a real targetted effort by Government to focus on SMEs and not speak all the time about The Magnificent Seven [multinationals],” he said. “We think that’s really, really important now.”
