Economic growth will be weaker in 2019, but will be affected even further in the event of a disorderly Brexit, business group Ibec has said.
In its quarterly economic outlook, Ibec said it expected the economy to grow by 4.1% in 2019, but will be weaker than recent years as the business cycle matured and the economy came close to capacity.
“These forecasts assume that an agreement on Brexit is reached. If this does not happen, 2019 will be significantly more challenging,” the body added.
Ibec said feedback from its members suggests many sectors are facing a more difficult period in the months ahead due to weak sterling and continued Brexit uncertainty.
“It is crucial that Government now seeks to ramp up no-deal planning by putting further supports for enterprise stabilisation, cashflow and diversification in place,” it said in its report.
Chief executive Danny McCoy said business investment is at record levels and the global footprint of Irish companies has never been larger.
10 years on from the financial crisis our globalised business model has delivered an improvement in living standards that many did not think was possible. As a result, the Irish economy comes into 2019 on the back of growing employment, wages, and incomes.
However, risks to our economy and business model are on the rise, Mr McCoy said, with Brexit and weak sterling top of the pile.
“This uncertainty is already impacting business decisions with a slowdown in SME lending in recent months as companies hold back investment decisions until there is a clearer understanding of what the final relationship between the EU and the UK will look like.
“Many companies are also implementing very costly contingency measures such as holding higher stock levels. Almost seven out of 10 exporting firms do not have experience of dealing with tariffs and customs arrangements.”
Mr McCoy warned against the reliance on corporation tax that had boosted Government coffers last year.
“While there are no immediate signs that this revenue will fall, there is no guarantee the upward trajectory will continue,” he said.