ACCA pessimistic about recovery

Confidence in the country’s economy has stalled among finance professionals as demand weakens and access to credit becomes more restricted.

That’s the view of the Association of Chartered Certified Accountants who yesterday released the latest Global Economic Conditions Survey.

The report shows that almost four in 10 of those surveyed believe that the economy was either deteriorating or stagnating in the second quarter of the year.

“Ireland’s strong bounce-back was one of the major economic stories of 2013, but it appears to have come to an end in early 2014... In the second quarter of 2014, 37% of Irish respondents (up from 28%) believed the economy was deteriorating or stagnating, while 61% (down from 69%) believed it was on the mend,” the report reads.

“More than two years of constant improvement in their expectations of public spending also came to an end, and on balance respondents saw a greater risk of government under-spending in the medium term.”

The second quarter of the year also saw a marginal fall in business owners’ confidence, with 34% of those surveyed more confident in their organisation, down from 36% in the previous quarter.

ACCA said that while the change in business confidence between the first two quarters of the year is statistically negligible, the levelling off of sentiment is the result of dwindling business opportunities and an improving investment environment cancelling each other out.

ACCA Ireland head Liz Hughes said the worsening sentiment among finance professionals has had a knock-on effect in other facets of the economy too.

“As a result of this more pessimistic macro outlook, business investment and capacity have fallen, even though they have both been recovering strongly over the past two years,” said Ms Hughes.

The findings are in contrast to the recent good news on the Irish economy.

Earlier this month, the KBC/ESRI consumer sentiment showed confidence among consumers was at a seven-year high as strong growth indicators and the expectation of a less severe budget impacted positively upon the public’s thinking.

Unemployment is also continuing to fall, down to 11.6% from 13.3% in June 2013.