Business optimism tumbles among Irish SMEs, says study

Almost half of business owners rank geopolitical uncertainty and associated cost and supply chain impacts as the biggest challenge to their business over the next year

Cróna Clohisey of Chartered Accountants Ireland says that cost pressures are intensifying for SMEs and profitability declining compared to six months ago.

Business sentiment among small and medium firms in Ireland has fallen in Ireland, according to a survey published on Tuesday, with 71% of SMEs less optimistic about the economic environment than they were six months ago.

The latest six-monthly SME Business Sentiment Survey from Chartered Accountants Ireland and GRID Finance found that only a quarter of companies report increased profitability, compared to 32% in October 2025, while  84% or respondents reported an increase in business costs. Almost half of business owners (48%) ranking geopolitical uncertainty and associated cost and supply chain impacts as the biggest challenge to their business over the next 12 months.

“These findings point to a worrying trend for SMEs, with cost pressures intensifying and profitability declining compared to six months ago. SMEs are being squeezed from all sides – by rising wages needed to retain staff, persistent increases in day-to-day operating costs and energy and regulatory pressures, making it harder to maintain margins and retain staff," said Chartered Accountants Ireland director of members and advocacy, Cróna Clohisey.

"These are no longer temporary headwinds; they are embedded challenges that are eroding margins, weakening competitiveness, and driving a much more cautious business outlook. As a result, more businesses now expect to be worse off (29%) than better off (28%) in the months ahead."

The SME Business Sentiment Survey was conducted by Coyne Research between March 26 and April 19, with more than 300 people surveyed from organisations employing fewer than 250 people, including small accounting practices, doing business in Ireland.

Almost half of SMEs (47%) said that they need energy cost supports but less than one in 10 firms has applied for energy cost assistance. "Making these supports more accessible and more effective must now be a priority," said Ms Clohisey.

The report also found 54% of replies calling on the Government to reduce regulatory and compliance burden, while two-fifths (40%) of businesses called for simplification of EU regulatory requirements.

Looking towards Budget 2027, 28% of respondents said the indexing of income tax credits and bands was their top priority. "With living costs continuing to rise, it’s becoming harder to retain staff and plan ahead. It’s no surprise that 28% of SMEs are prioritising the indexing of income tax credits and bands - this is about easing the pressure on households as well as businesses.”