Irish Firms Warn Infrastructure Challenges Are Constraining Growth – Grant Thornton International Business Report
- Mid-sized firms in Ireland slash profit expectations with only half forecasting profits to rise, down from 80% a year ago
- Energy and labour costs dominating concerns of Irish business community
DUBLIN, MAY 1, 2026 – The latest Grant Thornton International Business Report (IBR) has revealed that two thirds (66%) of medium sized Irish firms are concerned about infrastructure challenges in areas such as housing, transport and utilities. The quarterly international research study, which taps into the mood of 10,000 mid-market companies across 28 countries (including 102 in Ireland), also found that businesses are becoming increasingly concerned about energy and labour costs.
Attitudes to energy costs have seen a massive swing over the past fifteen months, with approximately a quarter (27%) of firms highlighting them as a concern at the end of 2024, but now just over half (51%) of Irish companies surveyed see them as a key constraint to business growth.
Similar levels of pessimism are evident in relation to labour costs, with only one in four (27%) flagging them as a constraint 12 months ago in Q1 2025, whereas 43% cited them as a key challenge to financial performance in the latest research. This is further compounded by a lack of skilled workers with almost half (49%) of businesses surveyed singled it out as a negative factor, rising steadily from 43% in the last quarter.
These pressures are feeding through to a marked deterioration in business outlook. At the start of 2025, 80% of companies surveyed expected an increase in profitability over the next twelve months, but one year on these expectations have come crashing down with only half (51%) forecasting a rise in profits over the same period.
Over three quarters (77%) of Irish firms expected to increase salaries, but this has fallen to approximately two thirds (64%) a year later. Only 18% of companies surveyed are forecasting a growth in exports over the next twelve months.
Commenting on the latest International Business Report, Martin Shanahan, Global Head of Industry at Grant Thornton, said:
“Confidence among Irish businesses is clearly under pressure, reflected by a perfect storm of structural and inflationary challenges that have been building over time. Infrastructure deficits across housing, transport and utilities are now acting as a tangible constraint on growth, while the sharp rise in energy costs over the past year has added a further layer of uncertainty for many firms.
These are not short-term issues, they go to the heart of Ireland’s competitiveness. Even more concerning in this respect is that the latest research was undertaken prior to the conflict in Iran and the aftereffects that Irish businesses are having to grapple with now.
Labour costs and skills shortages are making it more difficult for companies to expand. Ireland has long benefited from a strong talent proposition, but the latest IBR findings underline the need for continued investment in skills development and producing a pipeline of talent with the right skillsets from our education system to sustain that advantage.
What is particularly striking from our latest study is the shift in sentiment around profitability and growth. Attitudes have shifted significantly over the past 12 months, with fewer firms anticipating profit increases, lower appetite for salary expansion, and subdued export outlooks. While the resilience of this cohort of companies should not be underestimated, these results point to the need for a renewed focus on competitiveness, infrastructure delivery and cost management to support sustainable business growth in the period ahead.”
ENDS