Banking and Treasury outlook Q2 2025 with John Finn
“The world is moving very quickly. These slides were sent at 3:15pm yesterday; that means they’re probably out of date already.”
John Finn opened his presentation on banking and treasury with an acknowledgement of the turbulent business environment Irish SMEs are operating in.
John was one of the expert speakers at our recent SME Finance conference, held on April 15th 2025 in Cork. He is Managing Director of Treasury Solutions Ltd. an independent debt and treasury risk management advisor to the SME and corporate markets. He has been involved in structuring debt and risk management deals totaling over €10 billion since establishing the firm in 2001.
In his talk he addressed:
- Macroeconomic summary and key volatility factors
- Interest Rates – going up or down?
- Foreign Exchange and Tariffs
- Funding developments in a risky world
“Concerning” – the global economy
He outlined the current economic situation, noting that economies are generally slowing down – the most recent GDP readings were 0.2% in the EU, 0.1% in the UK, 2.4% in the States, and 3.7% in Ireland. Unemployment globally is generally low, between 4% and 6%, and inflation is broadly coming down but still not necessarily under control. Consumer confidence is falling and many companies are holding back on investment now because of the uncertainty.
Debt to GDP is one of the things he focused on, highlighting concerning debt-to-GDP ratios:
- Ireland: 72% (using GNI)
- Germany: 63%
- UK: 95%
- US: 122%
The US situation is particularly problematic as they’ve been running deficits consistently from 2002 to 2024. The scale of their debt growth is staggering, from $5.8 trillion in 2000, to $36 trillion in 2024. The continuous deficit means governments must keep borrowing to fund operations. While the US has managed this through its ability to print dollars as a reserve currency, this situation is becoming increasingly unstable.
A new and concerning development is that analysts are now identifying a “political risk premium” in US interest rates. This is unusual – political risk premiums typically only occur in emerging markets. The US is now seeing a 45-50 basis point rise in 30-year yields due to political uncertainty.
Recent currency movements have been dramatic – for example, sterling has recently gone from 82-83p to 86.5p in about 10 days. These rapid movements can significantly impact exporters’ profits if unhedged.
Longer-term the outlook is that economies are slowing. Demographics in the Western world are challenging with falling birthrates and aging populations.
Ireland and the lending outlook for Irish SMEs
Ireland, he noted, has been running a surplus for a number of years but that includes unsustainable tax revenues from some multinationals and one-off receipts including those from the recent Apple case.”
“If you strip out the non-recurring and “windfall” tax revenues, the Department of Finance in a Q4 2024 publication indicated that the underlying public finance position is one of a deficit: €6.3bn in 2025 and a forecast level of €5.7bn in 2025.”
“These figures are materially different to the expected actual surpluses when the non-recurring and windfall taxes are included (2025 forecast surplus of €9billion) indicating a that caution should be exercised on assessing the medium-term sustainable fiscal outcome.”
The Department of Finance are effectively saying, “Yes, we’re throwing off cash,” the fact is that cash is not sustainable. And if you strip that out, we’re actually running at a deficit.
On lending practices, John emphasised lending is “part science and part art”. Getting finance is taking longer as some of the banks appear to be under resourced due to reduced staffing levels. His advice to businesses looking to borrow is to start early.
It is taking longer. So if you need money in three months time, start now. Don’t start thinking about it in six weeks time.
In practice, banks lend as much to the person as the company – while numbers matter, John says, for Irish businesses seeking funding the business story and the right leadership are crucial. With those in place, there’s lots of reasons for Irish businesses to be optimistic, even in these volatile times.
“The question is, does the story stand up? That story is told by somebody who drives the business; you know from talking to that person whether they know the business, whether they know the sector, and whether they’re committed to it. You can’t get that across on a spreadsheet.”
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If you have any questions for John, or want more information, please contact jackie@paulodonovan.ie.
