BDO research indicates one in five firms lower prices to boost demand
19 August 2020
Derek Henry, Tax Partner, recently featured in the Sunday Independent and Business Plus, following the recent launch of this quarters BDO Optimism Index 2020. The index is a continuous survey carried out for the last eight years, tracking business performance and the views of business leaders across Ireland.
The results of the recent survey revealed that Business optimism for the second quarter of 2020 hit its lowest level since 2012; with 75% of businesses reporting lower levels of business activity compared to the same period last year. The survey highlighted the increasing pressure on employers, with 34% of companies reporting lower levels of employment and 68% experiencing lower levels of profitability during the second quarter of 2020. The findings also revealed that almost a fifth (18%) of businesses reported offering lower prices in an effort to stimulate demand during the Covid-19 pandemic.
Looking ahead, results showed that business sentiment among employers for the coming quarter remains negative. One area of particular concern was that despite the negative impact of Covid-19 on Irish businesses, only one in five have sought professional advice about either reopening or restructuring in response to the pandemic. Commenting on this finding, Derek Henry said:
“State-funded supports have clearly helped sustain many small and medium enterprises, protect jobs and buy time to restructure their operations in response to the restrictions on activity necessitated by the public health emergency.
“It is concerning, however, that only one in five businesses have sought professional advice about either reopening or restructuring their business in response to the pandemic. It’s hugely important for businesses to take action as early and decisively as possible during a crisis to try to limit the damage and ensure they remain viable long term.”
With businesses focused on limiting the damage of Covid-19 and ensuring they remain viable in the long term; Brexit has had to take a backseat. According to the results of the Optimism Index, the number of businesses that feel that Brexit will have a negative impact on their business dropped to its lowest level since 2017. Derek, however, noted that Brexit was still high on the agenda for Irish businesses and feels that the possible impact of Brexit is a compounding worries for Irish businesses and concern will increase in the months ahead:
“We would expect to see the level of concern increase further during the coming months as we near the ultimate deadline of December 31. Again, planning for Brexit as early as possible is the best way to mitigate any negative impact.”
Click DOWNLOAD to view the full findings from the BDO Optimism Index 2020 Q2.
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