A third of companies in Republic expect hit when Britain exits EU

A third of companies in the Republic expect Brexit to have a negative impact on their business, according to the latest BDO Optimism Index.

Some 34 per cent of the 350 businesses said Brexit would have a "somewhat negative" or "very negative" impact on their trading, with 50 per cent saying it would not have an impact on them and 9 per cent expecting a boost from the UK's decision to leave the European Union.

Exporters are most fearful about the prospects of Britain’s exit from the EU, with 36 per cent of the sector saying it would have a “somewhat or very negative” impact on their prospects.

Overall optimism

The overall optimism figure is in line with the previous quarter, falling slightly to 66.4 points (from 66.8 points) for the quarter.

Projections for third-quarter activity fell for the first time since 2011. Some 46 per cent of companies said they expected a higher level of activity in the third quarter, compared with 53 per cent who projected higher levels of activity in the same period of 2015.

That’s the first anticipated quarterly fall since 2011. There was a rise in the number of companies predicting lower activity in the third quarter, with 15 per cent anticipating a reduction, compared with 13 per cent in the same period last year.

Among larger companies, 18 per cent forecast a fall in activity in the third quarter, compared with 4 per cent who said the same thing last year. However, 62 per cent of these companies still expect a higher level of activity in the third quarter.

Some 19 per cent of exporters expect a drop in business in the period, compared with 14 per cent of companies who are indigenous only.

The retail and wholesale trade sector was most pessimistic about third quarter prospects, with 24 per cent expecting lower business levels in the period.

Employment levels

Second-quarter employment levels remained broadly stable. Some 77 per cent of companies said they employed the same number of people in the second quarter of 2016 as they did in the same period last year, and just 7 per cent said they had fewer people on the payroll, compared with 8 per cent who said that last year.

However, 16 per cent said they had more staff in the period, compared with 21 per cent who said that last year.

Some 49 per cent of companies reported higher business activity levels in the second quarter, a marginal increase from the same period in 2015, when 48 per cent of respondents reported higher business levels. That’s the slowest rate of growth in the period since 2013.

There was a fall in the number of Dublin-based companies raising prices in the second quarter, with 17 per cent saying they had increased prices in the period, compared with 22 per cent who raised prices in the same period last year.

There was also a sharp dip in the number of companies who said operating profit increased in the second quarter, 36 per cent in 2016 compared with 43 per cent in 2015.