The business landscape is improving rapidly with a dramatic increase in companies looking to increase staff levels and expand over the next year, according to a new survey.
The EY Capital Confidence Barometer, which is conducted twice a year, shows 70% of Irish companies that responded to the survey expect to create jobs over the next year, which is up 20% from the 50% level shown in the same survey last April.
A total of 89% of companies expect corporate earnings to increase over the next year, which is up 18% from last April.
There also seems to be an easing in credit conditions, which has been a huge impediment to growth over the past number of years. Some 58% of the respondents reported an improvement in credit availability, which is up from 37% earlier this year.
The consensus was that the economic environment has stabilised. Ireland is set to post the highest economic growth in the EU this year and EY’s latest Eurozone Forecast expects GDP to grow 4.8% in 2014.
“The focus on Irish exports in the US and UK should partly insulate the economy from mounting problems in the eurozone economy.
Almost two-thirds (64%) of respondents considered the local economy to be improving and growth appears to be becoming better balanced, with domestic demand making a contribution to growth, particularly investment. Consumer demand, however, remains sluggish,” said Mike McKerr, managing partner with EY.
Other findings include companies reporting they are actively seeking growth opportunities, but this will not be at the expense of costs and operational savings as companies remain mindful of the need to remain competitive.
Cost reductions and operational performance was described by 47% as the core focus of their organisations over the next 12 months, just topping growth that came in at 42% as recovery gets entrenched and companies look to manage forward.
A further 53% of firms say raising capital will be the key focus of management over the next year, with new equity the most common source of funding.
Growth strategies will be based on low-risk and sticking to core values with bolt-on acquisitions expected to drive merger and acquisition activity according to 86% of respondents.
A further 85% plan to acquire competitors and similar companies in their core sector. An additional 71% of respondents indicated a plan to focus on developing into new markets (with US, UK, Germany, India, Brazil and China topping the list.
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