Irish SMEs positive but global uncertainty looms large

Business recovery uneven with smaller firms more exposed, says Linked Finance optimism index

Mon, 02 Mar, 2026 - 01:10

Martin Claffey

Irish SMEs entered 2026 on a positive note, but remain vigilant amid global tariff uncertainty and returning price pressures, according to the latest Linked Finance Business Optimism Index.

The survey - which covers the fourth quarter of 2025 and performance and projections for the first quarter of 2026 - also shows a distinct move back towards higher prices compared with this time last year. Larger businesses are driving the price increase, with smaller firms less likely to raise prices, reflecting tighter margins and less flexibility to pass on costs.

It also noted that inflationary pressures have not fully subsided and may continue to shape trading conditions.

The index shows overall optimism at 64%, down from 67% year-on-year from Q4 2024, though notably improved from the first half of 2025.

Some 16% of SMEs reported lower headcount compared with last year, with smaller firms most likely to reduce staff numbers. Hiring was concentrated among mid-sized and larger firms, with a spike in job creation in the final quarter of 2025 prevented a net decrease in overall employment levels, the survey said.

“The defining trait of Irish SMEs over the past year has been resilience. Businesses have stabilised after a volatile period, but the recovery remains uneven. Confidence is holding, and profitability has improved, yet cost pressures and rising staff reductions show that many smaller firms are still operating close to the edge," said Linked Finance CEO Niall O'Grady.

"Larger businesses, particularly in Dublin, are beginning to expand again, while micro firms remain more exposed. The priority now is restoring certainty and trust - in economic stability, in predictable policy and in access to finance. When that confidence strengthens, Irish SMEs have shown repeatedly that they are ready to invest, hire and grow.”