In these turbulent times, understanding current trends and business sentiment is more important than ever before. On this page, you'll find a combination of economic and business data, market insights and thoughts from our subject matter experts to help you better understand and respond to the changing environment.

Andrew Webb comments on September 2022 CSO Unemployment Figures

For all the genuine fear in the economy about inflation, which has seen consumer confidence levels tumble dramatically, the labour market continues to hold its nerve, reflecting how business sentiment has been holding up better than the consumer tracker. Unemployment rates are now lower than pre-pandemic levels, a remarkable performance when considering how uncertain training conditions have been in recent years.  The key question as we head into winter will be whether the labour market can continue to confound predictions of an economic slowdown.  With pressure coming on business via inflated energy costs and other input inflation, the labour market risks are mounting.

Janette Maxwell comments on the July 2022 CSO Import/Export figures

Comparing the first six months of 2021 and 2022, exports of goods increased by just over 30% in 2022. The primary reason for the growth in exports of goods was related to chemicals and related products.

In the same period, the value of imports increased by more than a third and this was attributable to the increase in imports of both mineral fuels, chemicals and related products. Imports from Great Britain grew by a significant 54% in June 2022 compared with June 2021, and once again this was attributable to the increase in the importation of mineral fuels, chemicals and related products.

The EU accounted for 35% of total goods exports in June 2022 and the USA was the main non-EU destination accounting for 29% of total exports in June 2022. The EU accounted for 29% of total goods imports in June 2022 with the UK remaining the main non-EU source of imports, once again reinforcing the prominence of the UK as an Irish trading partner.

Almost two-thirds of Irish businesses upgrading technical controls to protect against growing risk of cyber-attacks

Mike Harris, Digital Risk Partner, comments on the latest findings of the Grant Thornton International Business Report:

‘We’re seeing growing anxieties around the risk of cyber-attacks to Irish businesses coming through in the International Business Report findings, and it’s no surprise either when we see the volume of attacks growing year-on-year.

‘The financial and reputational damage a cyber attack causes to a business and its people cannot be underestimated, and it’s reassuring to see businesses are acting now to prevent and mitigate against that risk. Staff training and efficient and upgraded IT infrastructure are going a long way to support this.

‘While Ransomware has been seen as the major threat in the last year and has been the clear focus of Irish organisations, other issues such as cloud security and digital supply chain security will increasingly command focus.’

 

Irish businesses remain committed to sustainability in spite of inflationary pressures and rising cost of business

Catherine Duggan, Director and Sustainability Specialist at Grant Thornton Ireland comments on the results of the International Business Report

As climate change moves to the forefront of the political, social and economic agenda, Irish businesses have been faced with the challenge of adopting more sustainable practices and becoming more transparent with ESG reporting.

Irish businesses have been confronted with the uncomfortable truth that they must either embrace ESG and sustainability, or become laggards compared to their competitors or counterparts.  

It is highly encouraging to see that 42% of Irish businesses consider ESG to be a priority for the coming 12 months and it is testament to that fact that Irish businesses are forward-thinking when it comes to navigating the challenges posed by the current economic climate.”

Irish businesses significantly less optimistic about economic outlook as inflation and international market volatility hamper growth prospects

Mick McAteer, Managing Partner of Grant Thornton Ireland, comments on the latest findings of the Grant Thornton International Business Report:

‘It’s very clear that businesses are navigating a period of uncertainty and planning accordingly to offset the impact of inflationary pressures via increases in selling prices. While optimism levels have dropped significantly in Ireland since the previous IBR survey, the sentiment for the economic outlook is slightly more positive than our numbers in the UK and the EU average which are at 59% and 52% respectively.

‘It’s important that businesses continue to insulate against inflationary pressures and the international trading environment at least in the short to medium-term while we monitor how markets react. Market diversification, business process efficiencies, digital transformation and automation are some of the ways businesses can do this.’

IBR H1 2022 - Highlights

Constraints/Restrictions

The factors that are viewed as acting as a major constraint on businesses are largely unsurprising. Energy costs are now reported by 60% of respondents to be a constraint, up from 55% in H2 2021. For context, the average rate up to 2020 was 18%. Energy costs are therefore a relatively new, and mounting challenge. Despite significant media coverage around economic uncertainty, specifically inflation, the percentage of businesses citing economic uncertainty as a constraint fell to 40% from 48% in H2 2021.

The availability of skilled labour has declined dramatically as a constraint since H2 2021. Then, 63% if respondents cited this as a constraint but that has declined to 45% in H1 2022. Labour costs have remained elevated as a constraint, with 58% of respondents referencing these. This is two percentage points higher than in H2 2022 but well above a five year average reading of 42%.

Somewhat surprisingly, the percentage of businesses citing regulations and red tape as a constraint has increased by 16 percentage points between H1 2022 and H2 2021. While this may be a temporary issue, as Irish firms adapt to a new trading relationship with the United Kingdom, it will be an important metric to track to flag up any longer term risks to Ireland’s reputation for ease of doing business.

 


Investment

While the proportion of Irish firms signalling their optimism has declined in H1 2022, investment intentions are up across all indicators bar investment in new property. 23% of respondents expect to invest in new property, down from 34% in H2 2021. The 23% figure is more in keeping with the ten-year average of 24%, suggesting that H2 2021’s 34% reflected an uncertainty about space requirements as people returned to work.

The strongest intention to invest is in staff. Perhaps reflecting the tight labour market, 63% of respondents intend to invest in staff, up from 55% in H2 2021. Intentions to invest in R&D are also particularly strong, up from 42% in H2 2021 to 58% in H1 2022. Despite the uncertain economic times, a large proportion of Irish firms are open to invest in their future competitiveness.

Andrew Webb comments on July 2022 Summer Economic Statement

A lot of talk lately has been about the potential for a recession in the face of rising prices. The Summer Economic Statement faces up to the challenges ahead and correctly plays up another ‘r’ word, resilience. The economy has been resilient in the face of the three major shocks of the pandemic, Brexit and the Russian invasion of Ukraine. Labour market performance has been strong, and exchequer receipts have over performed.  While these positives can buffer the economy to some extent, the economic headwinds are gathering pace. With borrowing costs starting to rise, and debt levels high, Budget 2023 is a finely balanced endeavour which will have to juggle helping with higher prices, limit fuelling more inflation and keeping in mind higher borrowing costs.

Andrew Webb comments on May 2022 CSO Unemployment Figures

The unemployment figures continue to provide good news in the face of mounting economic uncertainty. With consumer and business sentiment increasingly downbeat, and the Employment Wage Subsidy Scheme ending this week, there are increasing concerns that a recession is coming. How the labour market reacts over the coming months will thus be keenly observed. While a recession is not currently predicted, an increasingly nervous consumer may lead to a switch in that view in the months ahead.

Jarlath O'Keefe comments on February 2022 CSO Import/Export figures

The CSO figures for February 2022 demonstrate continued growth of exports to Great Britain with an increase of 21% when compared with February 2021. This brings the total value of exports from Ireland to Great Britain for the month to just over €1billion. This increase was driven by the rise in exports of food and live animals, confirming the continued reliance of Great Britain on the Irish market in these key sectors. 

Irish businesses look to reduce dependency on UK market as Brexit red-tape issues continue

Indirect Tax and VAT Partner at Grant Thornton Ireland, Jarlath O'Keefe, comments on the findings of the latest Grant Thornton International Business Report:

Irish businesses are looking to reduce their dependency on the UK market amid continued fallout from Brexit, according to Grant Thornton Ireland’s International Business Report. The survey of 62 mid-size Irish businesses highlights the ongoing concerns for any further Brexit-related checks or red-tape measures that may come into effect in 2022; with over a quarter (27%) of Irish businesses reducing their exports to the UK, and a further 21% reducing their reliance on UK suppliers.

Labour shortages and access to talent a major challenge to Irish businesses

Chief Economist at Grant Thornton Ireland, Andrew Webb, comments on the findings of the latest Grant Thornton International Business Report:

'Irish businesses are facing mounting pressures in sourcing and keeping skilled workers across 2022. The shrinking pool of skilled workers poses a number of challenges in terms of business growth, coupled with the challenges of inflation, supply chain issues, and rising energy prices.

Despite these issues, there is room for optimism on the current state of play in the labour market. Over half of Irish businesses are looking to invest in the upskilling of staff over the next twelve months, in turn allowing them to grow and develop their enterprises, and nearly half of Irish businesses (45%) expect to grow their teams and increase employment over the coming year.'

Optimism high among Irish businesses despite growing concerns for skills shortages

Mick McAteer, Managing Partner of Grant Thornton Ireland, comments on the latest findings of the Grant Thornton International Business Report:

‘Businesses remain optimistic for the coming year as the recovery from the pandemic prompts an increase in demand but we’re seeing increasing concern and new challenges to growth in spite of this. Skills and talent shortages, rising energy and therefore production costs, and the increasing cost of doing business as markets return to more stable trading patterns, are of great concern.

‘From a labour perspective, there is a skills shortage globally in a number of sectors that represents a major challenge for businesses in terms of growth, including here in Ireland, and the lengthy visa-processing times and other red-tape hurdles have only exacerbated this issue. Rising costs of doing business, rocketing energy prices and supply chain challenges also hinder the growth prospects in a variety of sectors and industries.

‘But with business optimism climbing to a three-year high, and many businesses insulating through new business processes and digital transformation, there is hope for businesses to continue growing in both domestic and international markets over the coming year.’

IBR H2 2021 - Irish highlights

Optimism

Rising optimism has been a feature of the IBR since the low point of H1 2020 when 39% of Irish businesses were optimistic about the next twelve months. Since then, as vaccine development and a successful roll out enabled economic restrictions to give way to reopening, business optimism has been on a strong upward trend. The latest IBR finds 85% of businesses optimistic about the economic outlook. This is up on the 76% from H1 2021 and 15 percentage points higher than the global average.  Of course, the emergence of the Omicron variant has changed the economic context yet again but the impact of that will not be known until H1 2022. The current expectation is that the impact from the Omicron variant will not be as severe as previous Covid waves.

Outlook

The general trend of Irish business optimism carries through to the outlook indicators in the IBR.  Almost two thirds of IBR respondents expect to increase their turnover and the buoyant labour market, which has seen job listings surpass pre-pandemic levels, appears set to continue. 45% of businesses expect to increase their staff compliment and only 13% expect to see a decrease.  Given the new trading relationship between the EU and UK, the IBR’s export indicators provide a telling insight. 37% of respondents expect to increase their export sales but only 23% expect to sell into new markets suggesting a steadier state post-Brexit than might have been feared.

Constraints/Restrictions

While optimism and outlook indicators are displaying strong positive sentiment, there is a strengthening sense that constraining factors to growth are increasing. Almost half of firms (48%) think that economic uncertainty is a constraint on their business, up 10 percentage points since H1 2021. The most significant changes in terms of constraints have come via energy costs in the labour market. For the first time in IBR’s history, more than half of businesses (55%) cited energy costs as a constraint on their business. For context, the average annual score in this indicator between 2013 and 2020 was 18%.

Similarly, the availability of skilled labour has shifted dramatically in the percentage of businesses citing it as a constraint on their business. 63% now reference the availability of skilled workers as a constraint, up from 37% in H1 2021. The previous highest reading was 50% in H2 2017.  This constrained availability of skilled labour is contributing to a corresponding increase in concern over labour costs as a constraint. 56% of businesses now cite this as a constraint, up from 27% in H1 2021.  This scale of this change between H1 and H2 suggests that the strength of the labour market has emerged from the pandemic at a much faster pace than expected.

Investment

Investment intentions were up in comparison with H1 2021, but the scale of increase identifies areas of focus for Irish Businesses. 42% of firms expect to invest in R&D, up from 40% in H1 2021. The percentage of businesses intending to invest in Technology fell from 48% to 40%, which may indicate that a lot of technology investment took place to implement home working and ensure business continuity during the early stages of the pandemic. Perhaps reflecting the tight labour market, 55% of business now expect to invest in staff skills, up from 35% in H1.

Budget 2022 summary

The Minister presented his first budget in two years from Leinster House amid a period of post pandemic uncertainty with rising cost of living pressures, a continuing housing crisis and the need for action on climate change.  He outlined his plans of helping the nation recover from the pandemic, by restoring our public services and living standards, and repairing the public finances.