This quarter's findings have made it evident that business confidence in Ireland has taken a significant hit in recent months. Overall optimism levels amongst Irish businesses have dropped by 11% compared to the same period last year. This declining rate of optimism is the lowest it has been since 2014. It is also worth noting that this is the largest decrease between the years 2012 and 2019.
In light of the recent change in UK leadership, our research has also found that a majority of Irish businesses (63%) believe that Brexit will have adverse consequences on their business. When we compare with our findings from the same quarter of 2016, just after the Brexit vote, only 34% of businesses carried this sentiment.
Businesses are reporting a decrease in higher levels of current business activity by 8% from the same quarter last year. There is very little difference in activity between indigenous only and exporting businesses.
As business optimism reverts to levels similar to the end of the recession in 2014, business outlook for the following quarter is also seeing a decline. A quarter of Irish businesses are predicting lower levels of business activity compared to the same quarter last year. This trend can be observed across both indigenous (25%) and exporting (19%) businesses and is evident across all businesses size surveyed.
Tying in with the lower levels of business activity and lower projections, operational profit is also under pressure. The number of businesses reporting higher levels of operational profits has decreased from 42%
in 2018 to 29% in 2019. Last year, businesses in and out of Dublin reported the exact same levels of lower operational profit (17%). In 2019 the reported rate of lower operational profit for Dublin businesses
has risen by 2% (19%), while for businesses outside of Dublin, this figure has risen by 7% (24%).
The overall trend towards higher prices continues this quarter. We have found that mid-sized businesses, businesses based outside Dublin and those in the retail and wholesale trade are the biggest contributors in driving this increase. The figures behind this trend show that nearly a third of Irish businesses are now charging higher prices than in the same quarter last year, an increase of 8%.
Levels of employment remain stable, with 75% of businesses maintaining the same staff numbers to the same quarter last year. Job employment growth in and out of Dublin levels remain static.
The results of the latest Index highlight the increasing levels of concern Irish-based businesses have about the impact Brexit will have on their business. We are advising clients to analyse their supply chains and business strategy, so they can isolate their exposure. Examining the supply chain to reduce the potential negative impact of Brexit on your business and alleviating costs associated with this are the first steps every business should make when examining the potential Brexit impact.