Business sentiment jumps despite Brexit and rising wage costs

Irish business sentiment has jumped to its highest level in two years with companies reporting a strong end to 2017 and expectations of continuing growth in early 2018.

However, the latest barometer from KBC Bank and Chartered Accountants Ireland also indicated that companies were increasingly uneasy about the uncertain event horizon around Brexit and rising wage costs.

The survey of nearly 350 Irish chief executives, managing directors and financial directors taken in the middle weeks of January, suggested momentum in Irish business activity is very positive at present.

The report noted that the number of firms reporting weaker conditions in the past three months was the smallest in the survey’s 11-year history.

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Some 87 per cent of respondents, however, felt their business was experiencing faster growth in Dublin than elsewhere in Ireland.

Marked divergence

This finding pointed towards the persistence of a marked divergence in pace in what is clearly a two-speed recovery in the Irish economy, the survey said.

The responses showed that Brexit stood out as the most notable concern, being cited by 17 per cent of respondents as the key risk to their business, while 10 per cent cited domestic wage pressures as the key risk.

Barry Dempsey, chief executive of Chartered Accountants Ireland, said: “The sentiment survey suggests Irish business conditions look very positive at the beginning of 2018.”

“Encouragingly, it finds the lowest number of companies – just 5 per cent of respondents – reporting weaker conditions in 11 years. So the economic upswing is now being felt very broadly across business from both a sectoral and regional perspective,” he said.

“While the survey suggests a very positive business outlook for 2018, companies cited a large and wide range of risks from Brexit to wage costs that could weigh on their prospects,” he said.