A rare piece of good news amidst the gloom

The news that McElhinney's of Athboy is to reopen next week after its shock closure announcement last month will be warmly welcomed at a time when jobs continue to be lost and the number on the live register in Meath climbs inexorably towards 12,000. To be able to report this week that the iconic ladies' fashion store is set to open its doors once again will come as a huge shot in the arm, psychologically as much as anything else, to Athboy and the surrounding areas. The fact that McElhinney's, along with new partners, the Flairline Group, is to rehire all its 56 staff members on the same hours as they previously worked before the closure in June is particularly positive and a testament to the determination of the family-owned business to get back on its feet after what has been an extremely difficult period. The store closed early in June after going into voluntary liquidation with debts of almost €6 million. It has now reached a concession agreement with Flairline, an Irish fashion group with 23 stores around the country, to reopen the famous store from next Monday. The announcement of the reopening will be welcomed not only in Athboy but all around Meath and beyond where the company has forged a hard-won reputation for fashion clothing among its loyal customers for over 70 years. No closure in this county had come to symbolise more the truly difficult trading conditions businesses are having to contend with in this recession than the demise of McElhinney's Fashions. From next week, the day-to-day running of the store will continue to be in the hands of the Sweeney family, with assistance from the Barron family's Flairline Group. It is a rare good news story in the still troubled retail sector which has been particularly badly affected by the recession. The trading environment remains difficult with core retail sales - minus a couple of exceptions - still on the decline, albeit marginally. Many businesses report that their cost base remains too high with rents, rates, service charges and wages still eroding margins. Retail Ireland estimates that the amount of money taken in by retailers has fallen 25 per cent in the past 30 months. Indeed, it appears the domestic economy remains in the doldrums at a time when optimistic noises are being made about Ireland's export performance and the country becoming an attractive location for foreign direct investment (FDI) again. A report out this week from IBEC notes a number of positive developments in the Irish economy, in particular how competitiveness has improved in a number of key areas. Increased productivity and lower costs have helped make significant strides in this regard, it added. The Irish labour force remains amongst the best educated in the world, the country is ranked third in the world by the World Bank in terms of ease of doing business here and decisive and credible action has been taken in tackling the country's budget deficit, all of which has impressed the international markets so far. But while an improving global economy and a weakening of the euro is a positive boon for Ireland's exporters, far from the boardrooms of the blue-chip ISEQ and FTSE-listed giants of international trade, the indigenous small companies that power local economies tell a somewhat different story. The domestic economy remains mired in difficulties and there is a danger of a two-speed recovery from the slump. Much more needs to be done by the Government to boost activity in the domestic economy where consumer confidence remains weak. A public capital investment programme, as suggested by some, is one area that could help stimulate local economies. However, it is even more important that the Minister for Finance does nothing to the taxation system in December's budget that will dampen further consumer spending habits. The return of positive consumer sentiment, where people feel confident they are not going to lose their job next week or next month, is the only thing which will help to kick-start the domestic economy once again. Taxation policies need to take account of this very important fact when Brian Lenihan is framing his 2011 budget in the coming months.