No deal Brexit concerns hit Ireland

No deal Brexit concerns hit Ireland

By Eamon Quinn

A key economic survey of households and businesses has found concerns over a potential no-deal Brexit, and the allied slide in sterling, have again knocked sentiment, with confidence having ebbed in Munster and Connacht-Ulster, in particular.

The survey for Bank of Ireland and the European Commission of 1,000 households and 2,000 firms showed economic confidence has dropped for a second month in August.

“The pound has weakened to around 90p against the euro in the past month or so. This is a concern for Irish businesses selling into the UK market and is something that we will be keeping a close eye on as the talks enter the crucial autumn phase,” said Bank of Ireland group chief economist Loretta O’Sullivan.

“On the consumer front, there also looks to be a touch of a summer spending hangover in the August data, with the number of households worried about paying bills up on last month”, she said, though consumers were more sanguine about their financial outlook.

Sentiment fell in all regions, with that of Munster and Connacht-Ulster falling the most, and the decline in the Rest of Leinster area being the less severe.

Businesses, including retailers and builders, said their costs rose but expect to keep prices unchanged for the time being. It also found people expect house prices and rental costs to continue to rise over the next year.

Finance Minister Paschal Donohoe said that business conditions for SMEs have further improved after his department’s survey showed small firms were accessing bank funding more easily.

The survey of 1,500 businesses showed they believe banks were lending more to SMEs in the six months to the end of March from the same period a year earlier.

After falling sharply through March of last year, demand for bank loans rose to 26%, according to the survey. The average cost of existing loans for SMEs fell slightly to 5.06%, it said.

However, that would still mean Irish SMEs pay among the costliest rates in the eurozone. A majority, or 55% of firms, said they saw conditions improving, with over two thirds of the survey saying they were in the black.

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