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Just 56% of Irish businesses are optimistic about the outlook of Ireland’s economy for the next 12 months

Grant Thornton’s latest International Business Report finds cost of doing business a major challenge in addition to global economic volatility

New data from Grant Thornton reveal that Irish business are increasingly concerned about the country’s economic outlook. The latest Grant Thornton International Business Report (IBR) found that only 56% of Irish businesses are optimistic about the outlook of Ireland’s economy for the next 12 months compared to 85% in the same period the previous year. Despite this significant drop, Irish businesses are still more optimistic about the economic outlook than the rest of the EU at 43%.

The dip in optimism is matched by a downward trend in businesses who expect revenue to increase in the coming 12 months. Only 56% of Irish businesses expecting an increase in comparison with 60% in H1 2022 and 63% in H2 2021. The report also finds that just 58% of businesses are expecting to increase investment in talent for the coming 12 months, which has declined from 63% in H1 2022.

Commenting on the findings of the Grant Thornton International Business Report, Grant Thornton Ireland Managing Partner Michael McAteer said:

“2022 was in many ways another challenging year for Irish businesses. As we emerged from the shadow of the COVID-19 pandemic, most businesses had hoped for a period of relative stability and recovery. However, the latest IBR data shows the impact that the war in Ukraine and associated increases in energy costs as well as market volatility has had on business sentiment and confidence.  This extended period of uncertainty has caused optimism levels to dip significantly as global economic instability shows no sign of abating and pressures mount in the economies of some of our biggest trading partners. Despite the overall downward trend, some solace may be found in that Irish businesses retain a level of optimism that is ahead of numbers in the UK as well as the EU average at 43% and 46% respectively.”

Increasing concern regarding cost of doing business

According to the report, the cost of doing business is a growing concern for Irish companies. Ireland is among the top three countries globally worried about energy costs, with 69% of Irish businesses now citing them as a key constraint. Labour costs are also a major concern as cited by 58% of businesses, up from 27% just two years ago.

Speaking on the publication of the latest IBR report, Grant Thornton Chief Economist Andrew Webb said:

“The cost of doing business is a major concern for Irish business leaders as energy costs and inflationary pressures continue to have an impact on levels of confidence and investment plans for many companies. As the war in Ukraine continues, fuel prices will remain top of mind for many companies while others are also facing challenges in meeting costs around talent attraction and retention. These concerns are reflected in the IBR report in relation to a reduction in planned investment in talent. Concerns around the costs of doing business will inevitably affect businesses plans for growth but Irish businesses have in recent years proven their resilience and agility in the face of crises. The challenge will be how to sustain this resilience in a protracted period of uncertainty.”

International Trade

Irish businesses also expect the ongoing economic situation to impact on exports and international trade. This period last year, 37% of Irish businesses expected to increase their exports – just 26% feel the same this time around. Just 18% expect to see an increase in the number of countries they sell to in the coming 12 months, while only 24% expect to increase revenue from non-domestic markets.

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