Irish firms third most pessimistic

IRISH business owners are the third most pessimistic of those in 39 countries who participated in a new survey by consultancy group Grant Thornton.

The negative finding has emerged despite renewed Government efforts to improve the lot of business owners in this country.

The Irish Business Report, (IBR) compiled by the international consultancy group, said Ireland ranked below only Spain and Japan in the pessimism rankings.

On the plus side, the report found that privately-owned businesses in Ireland were the second most optimistic in the world on the outlook for exports in 2011.

It showed German and Irish businesses sharing joint second (41%) in expectations for exports in 2011. The overall top spot was taken by Turkey with an optimism level of 61%.

This latest report shows growing optimism globally on the export front in general, reflecting a more positive global outlook.

Expectations for overseas sales have increased from 21% in 2010 to 25% in 2011, while the survey found that just 3% fear that exports will decline and 22% expect them to remain unchanged.

Pat Burke, a partner in Grant Thornton, said: “Irish businesses are going to have to look abroad if they are going to succeed in 2011.”

The report also documented the opinions of Irish business owners in a number of other areas.

It shows Irish firms are much more optimistic about an increase in selling prices, when compared with 2010.

“There’s been a 9% increase in businesses expecting prices to increase in the coming year,” he said.

Firms in Ireland are more confident of increased profit levels, with 73% expecting profits to continue at current levels or to increase this year. Jobs will continue to be hit, with the majority of firms forecasting a further decrease in employment in 2011.

While the pessimistic outlook for Ireland is disappointing, the survey does give some reason for optimism with improved outlooks for profitability and revenue, said Mr Burke.

“Three quarters of Irish businesses expect to increase or maintain profitability in the coming year. This is because they have trimmed the fat and taken difficult decisions in 2009 and 2010.”

The survey, which collects the opinions of more than 11,000 business owners annually across the world, also showed nearly 45% of privately-held businesses in Ireland have reduced pay in the past 12 months, while 50% have introduced a pay freeze in the last year.

“Lots of employees will be getting pay cheques this month with the increased taxes introduced in Budget 2011. The fact that 97% of Irish businesses either froze or reduced pay in the last 12 months puts their burden in context,” said Mr Burke.