BDO Optimism Index Q3 2017

11 September 2017

BDO is delighted to introduce the BDO Optimism Index figures for the third quarter of 2017. The index, a continuous survey carried out for the last six years, tracks business performance and the views of business leaders across Ireland.

The prospect of Brexit negatively impacting the Irish market is quickly becoming a reality for businesses in Ireland. This Optimism Index reveals that previous concern over the lack of information from government has now doubled among Irish businesses. 40% of Irish businesses now believe Brexit will have a negative impact on their business. This news comes just 14 months after the Brexit referendum when only 20% of Irish businesses believed Brexit would affect their business negatively (Optimism Index Q4 2016).

As the consequences of Brexit become more apparent, we are encouraging our clients to engage proactively in scenario planning and assess the possible impact that Brexit will have on their business. We are advising clients to analyse their supply chains and business strategy.

Despite this, overall, optimism for the quarter is down only marginally from this point last year, slipping from 66.4 in 2016 to 66.17 in 2017. Mid to large businesses continue to remain the most optimistic at 68.61 points and 65.27 points respectively.

However business activity and levels of operational profit both slipped in this quarter compared to previous years. One in four Irish businesses surveyed recorded a lower operational profit and experienced lower levels of business activity compared to the same quarter last year. Despite businesses recording lower operational profits and reduced levels of business activity, overall, the survey found that businesses remain optimistic about the next quarter with 40% of businesses saying they expect activity to increase in the next quarter.

Employment levels remained broadly unchanged this quarter compared to the same quarter last year. The survey also revealed that 24% of Irish businesses continue to increase their prices, an increase of five percentage points from 2016 as the shift towards higher prices continues.

We are beginning to see businesses coming to terms with what Brexit will mean for them and how it will impact their operations.

Ambitious and forward-thinking businesses need to focus on both the business opportunity and the tax implications Brexit will have. Whether an organisation views this uncertainty as a threat or an opportunity, they must engage with specialists who can advise them on the tax complexities of the situation and how to mitigate their level of risk.