Domestic companies are becoming less concerned about the effects US financial policy — including a proposed 15% cut in the US corporate tax rate to 20% — will have on the Irish economy but remain cautious on their own plans due to ongoing Brexit uncertainty, a survey shows.
Bank of Ireland’s latest economic ‘pulse’ barometer paints a mixed picture for household and business sentiment, but overall shows a strong recovery from an historic low last year.
“This time last year the outcome of the US presidential election caught many by surprise. It followed closely on the heels of the UK’s decision to leave the EU and also came in the midst of some industrial tension at home. All of this served to unsettle households and firms,” said Bank of Ireland chief economist Loretta O’Sullivan.
“But with the Trump administration making little headway in implementing its agenda over the past year, the hit to sentiment seems to be waning, whereas Brexit-related uncertainty is continuing to take a toll.
“This month further research was conducted looking ahead to next year. The results suggest that firms are starting to factor in Trump’s bark being worse than his bite, with just 16% reporting that they are putting their plans for next year on hold. This will be a space worth watching, though, as the current US tax reform proposals work their way through Congress,” said Dr O’Sullivan.
However, Bank of Ireland said its research shows the wait-and-see approach to investment decisions that many Irish firms have adopted this year in response to Brexit-related uncertainty, seems set to continue into 2018. Around half of those firms affected by the UK’s decision to leave the EU are putting their investment plans on hold.
In terms of consumer confidence, households were less upbeat about the economic outlook in November, though overall assessment of their own financial situation was unchanged.
“On a geographical level, business and household sentiment was up in Dublin this month, unchanged in Munster but down in the rest of the country — the Connacht/ Ulster region particularly downbeat.