Employers group Ibec has said it is imperative that the government provides a "robust" response to spiralling energy prices and other immediate inflationary challenges in Budget 2023.
In its pre-budget submission, the group has suggested tax and spending measures of nearly €2bn and said that inflation must be combatted with long-term investment to enhance living standards, overall quality of life and economic resilience.
Fergal O'Brien, director of lobbying and influence at Ibec, said some businesses would see their energy bills increase four or five-fold and that energy costs posed a "a significant threat to viability to many, many firms."
O'Brien cited the case of a large manufacturing business whose energy bills will rise from €20m to €100m this year and a small retailer who will pay €200,000 compared to €50,000 last year, while expressing concern about plans to impose additional charges during peak periods.
"We are not convinced from a broad business perspective that those regulatory tools, particularly the ones that are under consultation by the energy regulator at the moment are the right policy response," he said.
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"And we are also concerned about the additional network charges that have now been shifted onto the business sector."
Ibec also urged the government to take advantage of the EU temporary state aid framework to help businesses handle energy costs.
“In the short term, the focus of the business community will be on dealing with the impact of a rapid escalations in costs, particularly energy and labour costs," said Gerard Brady, head of national policy and chief economist at Ibec.
"This must be supported by a significant immediate package of emergency energy supports under the new EU State Aid framework along with a package of Budget Day incentives for energy efficiency and low carbon investment in 2023.
"Government must also do much more to control and offset the policy related labour costs which are impacting business.”
Ibec's Budget 2023 submissions also calls for flexible fiscal policy to help businesses through volatile economic conditions over the next year and for a time-limited labour market transition rebate for SMEs coming to terms with labour cost obligations.
The group has suggested the rebate should be funded from the National Training Fund (NTF) with a payment break element and a rebate for training, upskilling or productivity vouchers.
The document suggests offsetting incentives for energy efficiency, the adoption of low carbon technologies and alternative energy sources such as SEAI grant schemes, further super deductions for energy efficient investments, "greening" VAT rules and support schemes for micro and mini generation.
Ibec also called for annual investments in education, skills, childcare, research and innovation and digital of over €400m, and continued investment in competitiveness and productivity in the sectors hardest hit by Covid, with investments in town centres, skills and appropriate usage of the €1bn Brexit Adjustment Reserve.
“Budget 2023 arrives at a crucial inflection point for the global economy. Catalysed by huge cost pressures and tightening of financial markets, we are facing significant global economic headwinds, with the era of record low interest rates, low inflation, and spare capacity ending," said Brady
“As a small open economy, shifts in the flow of capital through the global economy will have an outsized impact on the Irish growth model. Our members are already experiencing this through tighter capital markets and rapidly rising costs.
"The outlook for Irish business is marked by growing concern at rapid shifts in our competitive position. This underlines the importance of controlling what we can here at home in Budget 2023."
