BDO’s Quarterly Optimism Index has found:
- Business optimism levels down 11% from the same quarter last year.
- Around two thirds of Irish businesses (63%) believe that Brexit will have a negative impact on their business
A quarter of Irish businesses expect to report lower levels of business activity compared to the same quarter last year. The overall trend towards higher prices has continued
August 2019: Business confidence in Ireland has taken a significant hit in recent months. According to BDO’s Optimism Index, a quarterly study that monitors business sentiment across Ireland, the overall optimism level amongst Irish businesses is down 11% compared to the same period last year, slipping back to levels not seen since 2014.
The research has also found that nearly two thirds of Irish businesses (63%) believe that Brexit will have a negative impact on their business. This is nearly double the level reported right after the Brexit vote in 2016, when 34% of businesses could foresee Brexit having a negative impact.
Speaking on Ireland’s business confidence and the effect Brexit is having, Carol Lynch, a Partner in BDO Ireland’s Customs and International Trade Services department, said:
“The results of the latest BDO Optimism Index highlight the increasing levels of concern Irish-based businesses have about the impact Brexit will have on their business, most likely sparked by the UK leadership change towards a more hard-line Brexit government Although we are still unsure about the full impact Brexit will have one certainty is that once Britain leaves the EU there will be a requirement for exporters and importers to make declarations and pay customs duties. This will involve costs for customs compliance and additional costs associated with potential delays at borders.
“Recent reports on warehousing space reaching near-capacity provides some insight into the levels of readiness among larger businesses in Ireland, but disruption to trade agreements will be an issue that will affect businesses of all sizes in Ireland, not just those who have warehousing space to stockpile product.
“Businesses of all sizes need to ensure they are adequately prepared for changes that could take place in the coming weeks. They need to take practical steps to prepare for Brexit as the deadline draws closer. 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. There are a number of steps that businesses can take to prepare including setting up a customs registration number (EORI), checking tariff classifications and ensuring they have a clearance agent to lodge customs declarations.
With business optimism reverting back to levels last seen towards the end of the recession in 2014, business outlook for the next quarter has also taken a hit, with a quarter of Irish businesses (25%) expecting to report lower levels of business activity compared with the same quarter in 2018. This trend is evident across both indigenous (25%) and exporting (19%) businesses, with both sectors expecting business activity levels to take a negative hit during the next quarter.
Pricing and employment levels remain positive
The overall trend towards higher prices has continued, with mid-sized businesses, businesses based outside Dublin and those in the retail and wholesale trade driving this increase. The figures show that 30% of Irish businesses are now charging higher prices than in the same quarter last year, with this figure jumping 8%
Employment levels have remained steady, with 75% of businesses maintaining the same staff numbers to the same quarter last year. Job growth levels remain almost identical at businesses both in and outside of Dublin.
Click here to view our full index, including projections for Q3.