Many businesses expected to close in New Year as discretionary spending disappears

Many businesses in Mayo are expected to close down or cease trading over the coming weeks following the poor Christmas trading period which some had hoped would throw a commercial lifeline to take them through 2011. Those most likely to be affected are operators in the hospitality sector including pubs, hotels and restaurants, which are not applying for renewals of property leases and pub licences.

The fall-off within the hospitality sector will come as no surprise given that the explosion in the numbers of such businesses during the Celtic Tiger years could not be sustained after the economic downturn. Already many in the sector operate their businesses on a seasonal basis, closing down for much of the year except during busy holiday periods.

As Ireland changes from a nation of spenders to a nation of savers, it is anticipated that only the most competitive retailers and service providers and those trading in essential items can be expected to last the course. Budget 2011 is also expected to act as a leveller for commercial trading as it begins to kick in from this month, with people cutting back even further on spending as disposable income decreases yet again.

The shock news this week that the Celtic Bookmakers chain has been placed into receivership, putting a handful of jobs in Mayo at risk, served to highlight just how much discretionary spending has been hit by the credit crunch.

Owned by media pundit and former Fine Gael agriculture minister, Ivan Yates, Celtic Bookmakers operates two outlets in the county, one on Rush Street in Castlebar and the other on Tone Street, Ballina. Established in 1987, Celtic Bookmakers employs 237 people, down from 256 in 2008. On Monday last AIB appointed a receiver to the company after debts in the region of €6 million were declared.

The 47 betting shops are now up for sale as a going concern, individually or jointly, and during numerous media interviews this week Mr Yates asserted that his main priority was to make the receivership work by helping to save as many jobs as possible.“I take full responsibility for this commercial disaster. There’s no hiding place for me on this and the consequences are there,” he said. “I was part of the Celtic Tiger thrusting forward. I gave up politics to drive this ambition to create a national brand and family business and it has ended in tears.

“The facts are betting is a discretionary item and the public are betting a lot less. I was also tied into a number of crippling long-term leases on property and even though I tried to get some traction on them, I only managed to sell on two shops. I was pretty confident because I was making money, we had low costs and were operating a meaner, leaner, machine but then creditors started to emerge and I had to give a personal guarantee and use my own property to secure money from the bank.”

Mr Yates received much public praise this week for having the decency and integrity to face up to his responsibilities and said he would now sit down with the banks to discuss everything. He added that he was hopeful of saving 100 jobs but noted that the accelerated growth of the business placed the company in a “difficult position given the extent of the recession”, and he could not say what the future held.

Meanwhile, other businesses, such as those operating in the trades of carpentry and plumbing, have been enjoying a bonanza in recent weeks due to the need for repairs and water works following the recent cold snap. Circumstantial effects are also resulting in a rise in demand for training and education services while ambitious business people are becoming more creative and turning to online trading and expansion abroad to ensure viability.

 

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