Irish companies putting expansion plans on hold as Brexit fears knock confidence

0
115

Irish companies putting expansion plans on hold as Brexit fears knock confidence

Companies putting expansion plans on hold as business sentiment plunges amid worries UK may quit without deal


An increased focus on Brexit-related risks weighed on confidence, according to a new report. Stock photo
An increased focus on Brexit-related risks weighed on confidence, according to a new report. Stock photo

Jobs growth and investment are under threat after Irish business sentiment weakened “notably” in the third quarter.

An increased focus on Brexit-related risks weighed on confidence, according to a new report by KBC Bank and Chartered Accountants Ireland.

A slowdown in output growth was also a factor, the report said.

“Companies have started to consider the possibility of a ‘breakdown Brexit’ in five months rather than the ‘Brexit bump’ that a carefully choreographed ‘soft’ Brexit more than two years away would likely entail,” it added. It said its findings were consistent with a healthy economy, but that companies’ focus has shifted from recovery to risk of late.

Austin Hughes, chief economist at KBC Bank Ireland, said: “Brexit is overwhelmingly seen as an unclear and present danger to Irish economic prospects, with 67pc of companies citing it as the major risk to the economy in the coming year.”

Mr Hughes added that a weakening in sentiment negatively effects investment and jobs, as companies put expansion projects on pause. “You’re seeing [companies] start to slow their orders, their output and their employment. Now it’s not a case that they’re actually stopping production, or letting people go. We’re not at that stage at all. They’re basically saying: ‘Let’s pause our expansion plans, let’s be careful about our hiring because the future… looks more uncertain’.”

The survey suggests that the pace of growth in activity and the mood of business have fallen back markedly towards those that prevailed in late 2012, KBC Bank Ireland and Chartered Accountants Ireland said.

The Government is today hosting a ‘Getting Ireland Brexit Ready’ workshop in the Convention Centre Dublin. The event was moved from a smaller venue because of demand. The 1,500 firms now expected to attend is the measure of the concern among business owners and managers about Brexit.

Micheál Quinn, owner of Galway-based vehicle manufacturing business Quinn RV SIP, said risks to his company’s supply chain were his main concern.

“We buy the raw materials for our products from mainland Europe, but the products come through the UK. We need to stockpile materials, which costs money and we need to buy the goods today, not next February or March. If you don’t have the raw materials you are dead in the water.”

He said the current euro-sterling exchange rate was “barely manageable” and that if the rate reaches parity his business is “gone”.

The fall in Irish business confidence of late mirrors a similar deterioration in UK order books that underlines the pervasive links between business conditions on either side of the Irish Sea, the report said.

The weakening in the latest Irish sentiment index chimes with this week’s UK CBI monthly trends enquiry for October, which saw quarterly order books decline at their fastest pace in three years.

At home, Mr Hughes said the recent Budget was not seen by respondents as materially altering the outlook for the economy next year. “Some 47pc of companies see Irish economic growth slowing next year but 29pc expect stronger growth,” he added. “While 19pc of firms see the Budget improving the economy’s capacity to cope with Brexit, another 7pc think it may weaken that capacity.”

Indo Business

!function(d,s,id){var js,fjs=d.getElementsByTagName(s)[0],p=/^http:/.test(d.location)?’http’:’https’;if(!d.getElementById(id)){js=d.createElement(s);js.id=id;js.src=p+’://platform.twitter.com/widgets.js’;fjs.parentNode.insertBefore(js,fjs);}}(document, ‘script’, ‘twitter-wjs’);

LEAVE A REPLY

Please enter your comment!
Please enter your name here