Companies showing recovery, but Covid impact on business looks set to linger

Nearly 70% of companies say Covid remains their main concern, with energy costs and the cost of overheads close behind

Just over 40% of firms claim to be back in growth mode after the worst of the pandemic upheaval and disruption.

Recruitment, rising overhead costs, and the lingering effects of the Covid pandemic are the main concerns for businesses on the island of Ireland, according to a survey by cross-border development agency InterTrade Ireland.

Its latest survey shows that just over 40% of firms claim to be back in growth mode after the worst of the pandemic upheaval and disruption, with 44% saying they are in a stable condition. 

Furthermore, as much as 58% of respondent firms said they have remained in the black for the past 12 months despite the challenging backdrop.

“It’s certainly positive to see that so many firms are stable, however … the context behind the figures tells a more complicated story. The impact of the pandemic and, in particular, higher operating costs continues to weigh heavily on firms,” said InterTradeIreland’s acting director of strategy and policy Kerry Curran.

Another concern that businesses have reported to the survey is the issue of recruitment. In particular, for those working in the construction sector and those in larger firms, it is a problem. 

"It remains to be seen, if in the long-run the inability to attract staff will continue to be a thorn in the side of businesses, which could constrain growth,” Ms Curran said.

Nearly 70% of companies said Covid remains their main concern, with energy costs and the cost of overheads close behind.

Meanwhile, the impact of Brexit is being felt by a similar number of businesses on either side of the border, with 49% in the North and 46% of businesses in the Republic reporting it as an issue.

However, in terms of the post-Brexit trading arrangements, only 8% of those companies with cross-border sales have not adapted yet in any way. 

This is a drop from the previous quarter.

“I am constantly impressed by the resilience of businesses … after an exceptionally difficult two years caused by the pandemic,” Ms Curran said.

“Many business owners may think now is the time to catch a breath. Asked about future plans, 41% of businesses want to focus on recovery, while just over a fifth want to maintain their current position. 

"However, there are still 22% of businesses that are seeking to find new customers in order to expand — in this cohort, over a third are looking to the cross-border market to grow sales,” she said.

A survey by Bank of Ireland at the beginning of this month showed business sentiment had improved as fears around the Omicron variant receded.

But, again, labour shortages for business — especially those in the construction sector — reared its head as a remaining key concern.

That earlier Bank of Ireland survey showed that while concerns remain companies expect to raise employee wages and two in five firms expect activity to increase in the next three months.