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Irish businesses focusing on managing risks for the next 12 months as they navigate economic uncertainty

Grant Thornton’s latest International Business Report highlights the resilience and adaptability of Irish businesses as they aim to mitigate new and emerging risks.

Irish businesses have highlighted economic uncertainty and access to a skilled workforce as significant constraints to growth over the next 12 months, owing in part to the ongoing war in Ukraine and rising energy costs. The latest Grant Thornton International Business Report (IBR) found that 50% of Irish businesses see economic uncertainty as a major risk, which is up from 40% in H1 2022. In addition, 61% report availability of skilled workforce as a challenge, which has increased significantly from 45% in the first half of the year.

Despite this uncertainty, Irish businesses are demonstrating continuing resilience and commitment to investing in talent with 52% expecting an increase in employment and 76% expecting to offer employees a pay rise in the next 12 months. This is above the average across the EU, where just 36% of businesses expect to increase employment over the next year.

Commenting on the publication of the latest IBR figures, Sara McAllister, Head of Business Risk at Grant Thornton said:

“Irish businesses continue to face significant economic uncertainty alongside increased pressures in sourcing skilled workers. In addition, the challenges of inflation, energy costs and geopolitical instability are all prevalent issues for businesses. So too is the attraction and retention of talent, in light of the cost-of-living crisis.

In the face of these challenges, businesses are focusing on risk mitigation and crucially on implementing measures to boost resilience. The fact that 52% of businesses are expecting an increase in employment and 76% are expecting to offer pay rises indicates that businesses are managing risks effectively with an eye to future growth. The key challenge for businesses now will be to sustain this resilience long-term and remain focused on what is best for their companies and their employees.”

Mergers and Acquisitions

When asked about mergers and acquisitions for growth in the next 12 months, more than 70% of Irish businesses said they are not considering either a merger or acquisition.

Speaking on the outlook of the M&A landscape and the results of the survey, Patrick Dillon, Head of Corporate Finance at Grant Thornton Ireland said:

“Global M&A activity slowed in 2022, with the fall off appearing most notable at the top end of the market in terms of deal size. However, we are continuing to see strong activity in the mid-market space with a significant amount of capital in the market and based on current pipeline we expect 2023 to be a busy year on the M&A front.”

The International Business Report recently revealed that just 56% of Irish businesses remain optimistic for growth in the coming 12 months.

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