Irish companies are increasingly bracing themselves for a worst-case scenario regarding Brexit, with many regarding the UK leaving the EU next March without the safety net of a transition period as a material risk, according to a survey.
There is a 33% chance of that so-called crash exit scenario, according to the latest business sentiment survey from KBC Bank Ireland and Chartered Accountants Ireland.
The survey shows that while 7% of companies feel the impact of Brexit on their companies has become clearer of late, 17% said they felt it had become less clear.
“Companies see a range of threats to their activities from Brexit, at present, but two concerns appear to dominate,” said Chartered Accountants Ireland chief executive Barry Dempsey.
“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,” he said.
While still buoyant, confidence levels among Irish companies is now at the lowest since early 2017. As well as Brexit, the tightening has been attributed to international trade tensions and domestic issues such as the housing supply crisis and risks of economic over- heating.
The survey found that companies are evenly split between spending on social infrastructure — particularly around health and housing — and the avoidance of overheating in the economy, when it comes to their wishlists for October’s budget.
“It’s not surprising that increased uncertainty of late has made Irish business more cautious.
However, Irish-based companies are reporting that their levels of output and employment remain on a very solid growth path,” said Mr Dempsey.