Firms remain optimistic on economy, study reveals

ONE of the country’s leading economists said forecasts of a slump in growth in 2008 were pessimistic based on the findings of a new business survey.

Austin Hughes, chief economist at IIB Bank, said the strong positive outlook on jobs and growth gleaned by the survey was encouraging.

“There is a clear message here — it needn’t be the end. There is still a bright future” for the economy beyond 2007, he said.

The study by IIB Bank and the Institute of Chartered Accountants found that 38% of companies were hiring, compared with 11% who were shedding jobs. The figures for employment growth are much higher than other countries.

Irish companies are confident that their capacity levels will increase in the months ahead, but worry about the state of the nation.

This apparent contradiction was understandable, said Mr Hughes.

Employers are confident of their own ability to do well in the future. “It was surprising that both construction and property showed some of the highest confidence levels gong forward,” he said.

This survey was a first and was based on replies from 500 chartered accountants active across all sectors of the Irish economy.

Overall the findings for business were very positive, but respondents had serious concerns about the Budget.

Four out of five firms want a neutral budget that neither takes money out nor puts money into the economy. They feel a key priority is the delivery of better infrastructure to allow companies to grow.

The businesses are optimistic about their own firms, but more negative about the economy in general. Almost half are more pessimistic about the economy than they were three months ago, while only 14% were more optimistic. For that reason, the survey says, a giveaway Budget should not be contemplated.

Two-thirds of firms reported a recent rise in costs, with one in seven reporting a “substantial rise”.

Overall, Mr Hughes said the 2006 results suggest most businesses are “very optimistic” about their prospects, but less confident about the general outlook.

“With business activity and hiring strong, costs rising and skill shortages emerging, Irish business think a giveaway Budget should not be contemplated. Instead the government must deliver the infrastructure necessary to ensure Irish companies can remain successful,” he said.