Irish business confidence falls to lowest level since pandemic – Grant Thornton International Business Report
DUBLIN, Wednesday 18 February, 2025 – The level of optimism among Irish medium-sized businesses about the outlook for the Irish economy over the next twelve months has fallen sharply to 54%, the lowest level since the onset of the Covid-19 pandemic (39% - H1 2020), according to the latest Grant Thornton International Business Report (IBR). This drop, from 81% (Q1 2025) at the start of 2025, highlights a significant deterioration in sentiment over the past year as Irish firms grapple with increasing global uncertainty and rising cost pressures. By contrast, global business optimism currently stands at 74%, representing a slight 2% year-on-year decline, underscoring the more pronounced challenges faced by Irish businesses.
The International Business Report is the leading survey of mid-market companies, offering insights from 14,000 businesses annually across 35 countries – including Ireland. The latest research highlighted that the decline in economic optimism among Irish firms is mirrored across a range of key business indicators. Confidence in projected revenue growth in the next year among Irish businesses has shrunk from 79% to 59% over the last three months (Q3 2025 vs Q4 2025.) Similarly, expectations for increasing headcount over the next twelve months have also weakened, dropping from 59% to 46% over the same period.
The research highlights a clear shift in the challenges facing Irish firms, with global economic volatility increasingly shaping business sentiment. Almost three in ten (29%) Irish firms surveyed now see geopolitical disruption as a key constraint on growth, a notable shift almost doubling from 16% in Q1 2025 and reflective of heightened international tensions and market uncertainty. While global concern about geopolitical disruption remains significant, with nearly half of businesses (46%) worldwide citing it as a constraint, the Irish figure of 29% indicates that although international worries persist, Irish businesses are comparatively less affected by geopolitical disruption.
Cost pressures are also undermining business confidence. The number of firms citing labour costs as a key constraint on their business has jumped from 27% (Q1 2025) to 40% (Q4 2025.) Unsurprisingly, this has had a knock-on impact with the amount of companies expecting to increase salaries over the next twelve months, falling from 77% (Q1 2025) to 54% (Q4 2025.) Firms also face the additional setback of a lack of availability of skilled workers, with more than half (54%) of Irish businesses identifying skills shortages as a barrier to growth. Concerns around energy costs have also risen, with 37% of Irish firms now citing energy as a key constraint – up from 27% at the end of 2024.
35% of Irish firms view regulation and red tape as a significant barrier, in contrast to 49% of businesses globally and across the EU, who identify it as a key constraint. This comparatively lower figure for Ireland suggests that Irish businesses are less burdened by regulatory challenges than their international peers, potentially offering them an advantage when it comes to navigating compliance issues.
Unsurprisingly, firms are taking a scalpel to certain types of spending, with marketing budgets being impacted as only four in ten (41%) businesses plan to increase brand investment, down from 65% at the start of 2025. Similarly, only 38% expect to increase their investment in sustainable initiatives over next 12 months, down sharply from 56% three months earlier (Q3 2025.) Despite this, the research also revealed that Irish business leaders are balancing short term pain against long term competitiveness. While plans to invest in certain areas may be impacted, just over half (54%) of the study’s Irish participants expect to increase IT spending over the next year.
Commenting on the latest International Business Report, Martin Shanahan, Global Head of Industry at Grant Thornton, said:
“The fall in confidence among Irish businesses reflects a broader shift in sentiment we are seeing across many markets as global volatility intensifies. Rising geopolitical tension, persistent inflationary pressures and slower global growth are forcing business leaders to become more conservative in their outlook for the next twelve months.
“For Irish firms, these challenges are compounded by domestic pressures, particularly rising energy and labour costs and the growing difficulty in hiring skilled talent. While this has led to more cautious expectations around revenue growth, hiring and pay, it is also driving a sharper focus on productivity, investment in technology and building skills internally. Firms are responding to global uncertainty by focusing on those levers that are within their direct control.”
ENDS
About Grant Thornton's International Business Report (IBR)
The Grant Thornton International Business Report (IBR) is the world’s leading mid-market business survey. Launched in 1992, IBR provides deep analysis and insight into the views and expectations of thousands of business leaders globally.
The research runs quarterly, interviewing senior executives within mid-market organisations across 35 economies, from all industry sectors, including over 100 from Ireland per quarter. Questionnaires are translated into local languages and fieldwork is undertaken through a mixed methodology, including online and telephone platforms. The Q4 research was conducted between 16 October and 28 November 2025.