Business sentiment slips in Summer ’18 on increased uncertainty
Irish business sentiment has weakened as increased uncertainty about the outlook for the global economy weighs on firms’ expectations for their own activity levels in coming quarters as well as their assessment of prospects for the Irish economy as a whole.
The pullback in sentiment is due to increased caution about the future as the summer survey found companies have continued to report stronger output and hiring in the past three months.
The KBC Bank/Chartered Accountants Ireland business sentiment index slipped to 114.2 in summer 2018 from 116.4 in the spring quarter. The latest reading is the weakest since that of spring 2017.
However, these responses signal continuing if more guarded confidence about the future as there were still more positive than negative responses to questions about the outlook for business and the broader Irish economy even if the gap between the two narrowed marginally since the spring survey.
The survey asked a number of questions on Brexit
On what should be the priority for Budget 2019, Irish business is split with equal numbers emphasising spending on social infrastructure (health and housing) and avoiding overheating in the Irish economy.
The need to address serious ‘structural’ shortcomings in areas such as health and housing while reducing ‘cyclical’ concerns around a return to a ‘boom and bust’ path for the Irish economy could make for a challenging fiscal package.
Commenting on the survey results, Mr Barry Dempsey, Chief Executive at Chartered Accountants Ireland said:
Mr Austin Hughes, Chief economist at KBC Bank Ireland who prepared the survey said: "While the number of companies reporting job gains in the past three months is four times the number of companies reporting job losses, it is clear that confidence is being affected by a range of threats running from Brexit and trade tensions internationally to domestic concerns such as housing and overheating risks.’
Mr Hughes added:
Mr Dempsey said: "Companies see a range of threats to their activities from Brexit at present but two concerns appear to dominate. These are potential constraints to their access to the UK market and the prospect of notable increases in customs documentation and regulatory requirements. So companies appear worried about both ‘red ink’ and ‘red tape’ impacts on their operations from Brexit."
Mr Dempsey added: "It’s clear therefore that Irish business needs to prepare for the consequences of a ‘hard Brexit’ and our new guide “Taking the Lead - Chartered Accountants and Brexit” produced in association with the Institute of Chartered Accountants in England and Wales, will help both Irish and UK businesses prepare for customs checks and controls that they could face after Brexit."
- Digital Desk