One in three firms lose business due to inflationary pressures

Irish business confidence has fallen to its lowest level since October 2020.

One in three firms in Ireland have reported losing business due to high levels of inflation, according to a new survey.

The manufacturing sector was found to be the worst affected with 43% of companies stating that they had lost business compared to 27% of firms in the services sector.

The results from the Business Outlook Index survey from Accenture and S&P Global revealed that there had been large downward revisions to business and employment sentiment as high levels of inflation are forecast to continue.

Irish business confidence has fallen to its lowest level since October 2020.

The survey showed that the net balance for business activity in the manufacturing and services sector declined steeply between February and June, falling from +55% to +24%.

The drop in business expectations in Ireland was the second-largest out of all countries surveyed. Out of 17 countries, only Germany reported a stronger decline in expectations.

Since the February outlook survey, Irish firms across the board have scaled down their plans to increase employment and investment.

However, Ireland's net balance for employment stood at +24% in June, the highest level of sentiment out of all European countries surveyed.

The manufacturing sector in Ireland reported particularly steep cuts to growth. Results showed that business sentiment in this industry was at its lowest level since the global financial crisis.

The survey revealed that companies had widespread concerns regarding the effects of high levels of inflation on the economic outlook. A number of firms noted that they are expecting a recession.

Businesses stated that other threats to their economic outlook included challenges with securing materials and staff.

The Business Outlook Index surveyed approximately 600 Irish companies, all of which are based in the manufacturing, services and construction industries.