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| Irish businesses struggle to find ways to beat downturn | Irish businesses struggle to find ways to beat downturn |
| (4 months later) | |
| As Ireland braces itself for a further €3.5bn of spending cuts and tax hikes in Wednesday's budget – the country's sixth austerity budget in a row – two young Dublin-based entrepreneurs have responded with their own personal austerity measure: they are not taking any wages. | As Ireland braces itself for a further €3.5bn of spending cuts and tax hikes in Wednesday's budget – the country's sixth austerity budget in a row – two young Dublin-based entrepreneurs have responded with their own personal austerity measure: they are not taking any wages. |
| Garrett Fitzgerald and his partner James Boland astounded their friends and family and defied the banks by opening a restaurant this year not far from the river Liffey. | Garrett Fitzgerald and his partner James Boland astounded their friends and family and defied the banks by opening a restaurant this year not far from the river Liffey. |
| With consumer spending the weakest link in the battered Irish economy – average pay is down 15% from the peak, unemployment is nearly 15% and house prices are down 47% in the last five years (57% in Dublin) – the couple accept that their Brother Hubbard cafe on Dublin's Capel Street is a gamble. | With consumer spending the weakest link in the battered Irish economy – average pay is down 15% from the peak, unemployment is nearly 15% and house prices are down 47% in the last five years (57% in Dublin) – the couple accept that their Brother Hubbard cafe on Dublin's Capel Street is a gamble. |
| For Fitzgerald it has been a particular leap of faith given that he had a secure job in the Irish civil service before venturing into an industry severely hit by the recession. | For Fitzgerald it has been a particular leap of faith given that he had a secure job in the Irish civil service before venturing into an industry severely hit by the recession. |
| The two, both in their mid-thirties, learned the tricks of the trade firstly at a catering school in Ireland and later in Melbourne, Australia, where they worked in cafes and restaurants. | The two, both in their mid-thirties, learned the tricks of the trade firstly at a catering school in Ireland and later in Melbourne, Australia, where they worked in cafes and restaurants. |
| "We formulated the plan to open up a restaurant in the good old days before things in Ireland took a turn for the worse. While we were in Australia the economy back at home crumbled so it was quite a worry for us deciding to return to Ireland and follow our dream," said Fitzgerald. | "We formulated the plan to open up a restaurant in the good old days before things in Ireland took a turn for the worse. While we were in Australia the economy back at home crumbled so it was quite a worry for us deciding to return to Ireland and follow our dream," said Fitzgerald. |
| Despite that, the pair returned to Ireland almost exactly two years ago, when the country was about to borrow €67bn from the International Monetary Fund, the European Central Bank and the EU, and lose its economic sovereignty. | Despite that, the pair returned to Ireland almost exactly two years ago, when the country was about to borrow €67bn from the International Monetary Fund, the European Central Bank and the EU, and lose its economic sovereignty. |
| Boland said the expensive, high quality restaurants of Dublin were hit hardest by the downturn, so they decided to sell quality food, Irish produced, at more competitive prices. | Boland said the expensive, high quality restaurants of Dublin were hit hardest by the downturn, so they decided to sell quality food, Irish produced, at more competitive prices. |
| Like thousands of Irish small and medium enterprises, Boland and Fitzgerald faced opposition and scepticism from some of the country's banks – the same financial institutions Irish taxpayers rescued from the brink of bankruptcy with billions of euros from public funds. | Like thousands of Irish small and medium enterprises, Boland and Fitzgerald faced opposition and scepticism from some of the country's banks – the same financial institutions Irish taxpayers rescued from the brink of bankruptcy with billions of euros from public funds. |
| Looking ahead to the budget and the prospect of demand being driven further downwards, Fitzgerald said he and his partner have spent a year not paying themselves any wages, and working six or sometimes seven days per week to keep their cafe ticking over. | Looking ahead to the budget and the prospect of demand being driven further downwards, Fitzgerald said he and his partner have spent a year not paying themselves any wages, and working six or sometimes seven days per week to keep their cafe ticking over. |
| They want to see help for small businesses in next week's budget. "There seems to be no government financial support for start-up businesses that rely on domestic demand. All the cash seems to be for enterprises that are geared for the export market," said Fitzgerald. "Of course in terms of GNP that is important but its domestic demand that it is in the doldrums and needs help." The two men have created nine new job since Brother Hubbard opened in March. | They want to see help for small businesses in next week's budget. "There seems to be no government financial support for start-up businesses that rely on domestic demand. All the cash seems to be for enterprises that are geared for the export market," said Fitzgerald. "Of course in terms of GNP that is important but its domestic demand that it is in the doldrums and needs help." The two men have created nine new job since Brother Hubbard opened in March. |
| In complete contrast, another cafe in Athlone, an hour and half's drive from Dublin, which also opened up in 2012, caters for a very different kind of recessionary customer. | In complete contrast, another cafe in Athlone, an hour and half's drive from Dublin, which also opened up in 2012, caters for a very different kind of recessionary customer. |
| Oliver Williams, a former helicopter pilot and one-time homeless man in London during the 1980s, set up his soup kitchen this autumn in Athlone's Sean Costello Street in response to growing levels of poverty in the Irish midlands town. | Oliver Williams, a former helicopter pilot and one-time homeless man in London during the 1980s, set up his soup kitchen this autumn in Athlone's Sean Costello Street in response to growing levels of poverty in the Irish midlands town. |
| Sitting inside the Oliver Twist cafe on a freezing November lunchtime, blowing into a bowl of steaming hot soup laced with minced meat, 42-year-old Gerry Breslin explained that his main customers are no longer down and outs or drug addicts living on the streets. | Sitting inside the Oliver Twist cafe on a freezing November lunchtime, blowing into a bowl of steaming hot soup laced with minced meat, 42-year-old Gerry Breslin explained that his main customers are no longer down and outs or drug addicts living on the streets. |
| "There are families who come in here for lunch because their main breadwinner has lost his job. I haven't worked since I was injured in an accident a few years ago, but when I recovered there were no more jobs out there in Athlone because the recession had arrived. | "There are families who come in here for lunch because their main breadwinner has lost his job. I haven't worked since I was injured in an accident a few years ago, but when I recovered there were no more jobs out there in Athlone because the recession had arrived. |
| "I can just about afford to make one evening meal a day in my apartment using rice and pasta and a couple of vegetables. If it wasn't for this place opening up I wouldn't have had the money to have lunch as well." As he talks, some African women pushing prams, and men with Polish accents, come in to ask if there is any free produce on offer from the cafe's food bank. | "I can just about afford to make one evening meal a day in my apartment using rice and pasta and a couple of vegetables. If it wasn't for this place opening up I wouldn't have had the money to have lunch as well." As he talks, some African women pushing prams, and men with Polish accents, come in to ask if there is any free produce on offer from the cafe's food bank. |
| While Breslin breaks up his day at the Athlone soup kitchen and Boland and Fitzgerald work 24/7 to keep their business afloat back in Dublin, an Irish centre-left economic thinktank has warned that further reductions in the incomes of the poorest people will have the largest negative impact on domestic demand. | While Breslin breaks up his day at the Athlone soup kitchen and Boland and Fitzgerald work 24/7 to keep their business afloat back in Dublin, an Irish centre-left economic thinktank has warned that further reductions in the incomes of the poorest people will have the largest negative impact on domestic demand. |
| Tom McDonnell, of the Tasc.ie institute, said: "If you want to resuscitate consumer spending then hitting the spending power of the poor is the single most damaging thing you can do. | Tom McDonnell, of the Tasc.ie institute, said: "If you want to resuscitate consumer spending then hitting the spending power of the poor is the single most damaging thing you can do. |
| "The reason is Marginal Propensity to Consume. The poorest spend almost all of their income (ie they have a very high MPC) and by and large do not have the resources to save. The government should avoid cutting further their spending power by increasing consumption taxes like VAT and excise, reducing welfare rates or increasing direct taxes on low income workers." | "The reason is Marginal Propensity to Consume. The poorest spend almost all of their income (ie they have a very high MPC) and by and large do not have the resources to save. The government should avoid cutting further their spending power by increasing consumption taxes like VAT and excise, reducing welfare rates or increasing direct taxes on low income workers." |
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