Confidence in the economy dips among Cork firms ahead of budget, as costs continue to bite

Unemployment is currently at a record low of around 4% and the lack of skills available among the remaining talent pool is holding businesses back, according to Cork Chamber.

Confidence in the economy has dipped among Cork-based businesses as a tight labour market as well as operational costs continue to bite, according to a new survey.

Confidence dropped slightly to 80% for the last three months, from 84% in the previous quarter, ahead of the budget next week, Cork Chamber’s Economic Trends report supported by Permanent TSB shows.

“It is interesting to note that while personal business confidence remains high, there has been a fluctuation in confidence within the broader Irish economy,” said Permanent TSB business banking manager Auriol Kelly.

Outside of Cork, other businesses also seem to be struggling with stubbornly high costs.

A separate report by professional services firm PwC showed insolvency levels have risen in annual terms following the wind-up of covid-related government supports and the increasing cost of doing business amid an inflationary environment.

Business failures rose by 33% in the first nine months compared to the same period a year earlier, the latest Insolvency Barometer found.

The company estimated that the total number of insolvencies will be around 650, compared to 539 in 2022, as the final three months of the year are usually the “busiest period for business failures”.

The arts, entertainment, and recreation sector, as well as the hospitality sector, remain two of the largest sectors for business failures. 

The retail sector has seen the most business failures with 116 in the year to date, according to the report.

The report found 352 insolvencies have already occurred this year — up 79% on 2021 levels.

However, this figure remains low compared to 2019 levels as the current annual failure rate is 25 companies per 10,000.

The pre-pandemic level of insolvency was 36 per 10,000.

Meanwhile, Cork Chamber president Ronan Murray urged the Government to invest more in further and higher education and research institutes to “bridge” the skills gap and aid business growth.

“The talent and skills availability required to meet growth opportunities should be a positive differentiator, driving innovation and success in our region,” said Mr Murray in the Cork Chamber report.

Unemployment is currently at a record low of around 4% and the lack of skills available among the remaining talent pool is holding businesses back that want to improve on areas including sustainability, according to the chamber.

“Despite these challenges, businesses are still looking to grow and upskill their workforce with 52% reporting they plan to increase employee numbers and 58% expressing a desire to undertake a sustainability course,” said Mr Murray.

The vast majority of respondents to the Cork Chamber survey said they are optimistic about their finances.

However, there was a slight decrease in net profits over the September quarter, with 38% of respondents observing an increase in net profits, down 5% from 43% from the previous three month period.