Irish Businesses Turn Cautious on Economy – Grant Thornton Report

Press Release

Irish Businesses Turn Cautious on Economy – Grant Thornton Report

30 Oct 2025

Sharp Decline in Confidence as Irish Medium-Sized Businesses Turn Cautious on Economic Outlook – Grant Thornton International Business Report 

• Level of optimism about the outlook for Irish economy over the next 12 months contracts from 81% to 60% over past six months
• Energy costs, lack of skilled workers and regulatory red tape flagged as the top three constraints on Irish mid-sized firms

Dublin, October 30, 2025 – The level of optimism among Irish medium sized firms in their outlook for the Irish economy over the next twelve months has eroded significantly, dropping by 21% over the past two quarters (81%: Q1 2025 vs 60%: Q32025) according to the latest Grant Thornton International Business Report (IBR). The pessimism among Irish companies can be seen in their efforts to control costs with just six in ten (61%) businesses planning on giving salary increases in the next year, compared to Q4 2024 when 90% of firms were planning on increasing staff renumeration.

The Grant Thornton IBR, which provides insights into the attitudes of 10,000 mid-market businesses across 28 economies, identified a range of key constraints which are hampering Irish medium sized businesses’ ability to grow, with energy costs (37%), lack of skilled workers (37%) and regulatory red tape (30%) flagged as the top three concerns.

Despite the decline in confidence in the economy and constraints hampering their ability to grow, Irish mid-sized companies are still planning strategic investments as they plot a course through choppy waters. For example, the number of firms planning to invest in sustainable initiatives over the next year has almost doubled over the past three quarters (33%: Q4 2024 vs 56%: Q3 2025). Likely factors influencing this behaviour are changing stakeholder expectations and their trickle-down effect on the supply chain, with multinationals increasingly asking suppliers for detailed environmental information, in addition to increasing energy costs and need to reduce demand.

A significant proportion (61%) of companies surveyed are also planning on upskilling their workforce over the next twelve months, which reflects the finding that availability of skilled workers is proving to be a key constraint on Irish medium sized firms. Many businesses are choosing to build talent within their own organisation, particularly with AI becoming more embedded across the economy. This is complemented by the fact that almost six in ten (57%) businesses surveyed are also planning technology investments in the year ahead.

Concerns about global economic uncertainty have further decreased among Irish businesses surveyed (27%) compared to Q2 this year (33%). This is in sharp contrast to the global rate of 62% (up 2% from Q2). Similarly, Irish concerns about geopolitical disruption have eased significantly, at 17% compared to 26% in Q2, against a global figure of 52% (53% in Q2).

Commenting on the latest International Business Report, Martin Shanahan, partner and head of industry, Grant Thornton, said:

“While confidence among Irish mid-sized businesses has dipped sharply over the past six months, companies are not retreating into their shells. Business leaders are taking a strategic approach to challenges like cost pressures, talent shortages, and regulatory complexity. What we are seeing is a shift from optimism to pragmatism as firms invest in sustainability, technology and skills - areas that will be critical to competitiveness in the years ahead.

 

“The increased focus on upskilling, AI and green investment demonstrates that Irish mid-market firms are not standing still. Given the volatility that most have experienced over the past number of years, it is positive to see the shift in mindset with leaders looking beyond short-term pressures and focusing on long-term growth. Despite the headwinds, it’s clear that Irish businesses continue to see opportunity amid uncertainty and are positioning themselves to win when market conditions improve.”

Experts / Authors

Martin Shanahan

Martin Shanahan serves as the Head of Industry for Grant Thornton Advisors LLC, overseeing operations, strategy and growth initiatives for the firm across a range of industries