The scarring effects of the pandemic has resulted in small and medium firms investing less in their businesses, according to the Economic and Social Research Institute.
It found nearly 60% of enterprises invested in capital in 2023 compared to 64% before the Covid-19.
At the same time there was a significant fall in funds allocated by firms to climate related measures.
The report, funded by the Department of Finance, said 18% of companies invested in buildings, 28% in transport equipment and 42% in machinery and equipment.
It found willingness to expand operations had decreased slightly compared to 2021 which indicated increased risk aversion among some firms.
The report said access to financing as a major barrier had fallen from 34% in 2021 to 27% in 2023.
Among SMEs, that obtained a loan, the median interest rate increased from 3.6% to 5.6% in 2023.
However, European Central Bank interest rates have been falling steadily since late last year which normally feeds through to interest rates on business loans.
Climate and energy-efficiency–related investments fell in 2023, both in terms of the proportion of firms and median expenditure from €34,000 to €20,000.
At the same time, the proportion of SMEs indicating that climate change adaptation is important for their business fell across all sectors and all sizes of firms.
Dr Conor O’Toole, the leading author of the report, said: “This is concerning given the importance of investment for long-term growth. In particular, a notable fall-off in climate-related investments represents a challenge for the decarbonisation pathway.”
Article Source – Small and medium firms investing less post pandemic, ESRI report shows – RTE
