Irish businesses feel heat of rising costs, says business barometer

Azets quarterly report says 48% of firms delaying planned investment and expansion, while 54% have paused hiring

Neil Hughes, chief executive of Azets Ireland.

Close to half of Irish businesses have deferred investment due to rising cost pressures, according to a new report published today.

The quarterly Business Barometer by professional services firm Azets shows a growing impact of rising energy costs and economic uncertainty on Irish businesses. The report, which surveyed 150 firms between July and August 2026, found that 69% of business leaders cite elevated energy prices among their top concerns. The findings also show rising costs are influencing business decisions, with 48% of firms delaying planned investment and expansion, while 54% have paused hiring. Almost one in two businesses (46%) expect to pass rising costs on to customers.

Despite the growing fears from geopolitical issues, overall, economic optimism increased slightly to 7.3 out of 10, up from 7.2 in the previous quarter and 6.9 at the beginning of the year. Small businesses were particularly positive about the future, recording an optimism score of 8.2 out of 10, compared with 6.6 among larger organisations.

“The findings highlight the real-world impact these pressures are having. Many businesses are delaying investment decisions, pausing hiring plans and considering price increases simply to manage rising operating costs,” said Azets chief executive Neil Hughes.

“Despite these challenges, optimism remains strong, particularly among smaller firms. Many have adapted to a world where volatility is no longer the exception but part of day-to-day business. It is that agility that is enabling businesses to succeed today.

“However, the resilience of Ireland’s SMEs cannot be taken for granted. Many are absorbing significant cost increases while trying to protect razor-thin margins.”

While most firms recognise the opportunity provided by AI to increase productivity, 71% of leaders feel their organisation may no longer be competitive if they do not keep pace with advances in AI innovation.

“As the Government prepares for Budget 2027 next week, it’s critical that they support businesses through measures that ease immediate cost pressures while creating the conditions that can enable ambitious indigenous businesses to grow and scale internationally,” he said.