Sharp fall in optimism about Irish economy among business leaders

Confidence in the strength of the Irish economy among business leaders has dropped sharply over the past year, according to a new survey that was carried out before the UK voted to leave the European Union.

The latest PwC Irish CEO Pulse survey, which was conducted during April and May, shows 71 per cent of the chief executives interviewed were optimistic about the economy. This compares to 92 per cent of business leaders surveyed in a corresponding study carried out last year.

Given the survey was carried out prior to the vote to leave the EU, it is not surprising to see uncertainty expressed about how Brexit would affect growth. However, the scale of the decline in confidence will cause concern.

According to PwC, while Brexit weighed heavily on the minds of Ireland’s business leaders, unease over political instability in Ireland, volatility in China and the outcome of the US presidential election also contributed to the fall in confidence.

Skills shortage

The survey also reveals growing concern over a skills shortage, with the percentage of chief executives mentioning the lack of availability of skilled employees at an 11-year high. Other business threats highlighted included rising labour costs, cyberthreats, more red tape associated with tax and compliance burdens, and increased competition.

Although business leaders are feeling less optimistic about the Irish economy than they did a year ago, many are still confident about their own prospects. Some 76 per cent expressed confidence in the ability of their own business to grow, down from 82 per cent a year earlier.

Many chief executives also indicated they were planning for growth, although it is possible some have curtailed such plans given the Brexit outcome.

According to the survey, 84 per cent of those surveyed said they were seeking to grow revenues this year, while 62 per cent were looking to increase employees numbers, the highest level recorded in more than a decade.

In other positive news, as many as 95 per cent of multinational chief executives described their investment in Ireland as a success, with most saying they intended to either increase of maintain their presence here.

Over two-thirds of those exporting said the UK remained their most important market, with the US, Germany, France and China also seen as important territories.

Some 75 per cent of survey participants said exchange rate volatility was hampering growth plans, with 40 per cent saying they were concerned about supply chain disruption.

Nonetheless, over a third of exporting companies said they were planning growth of over 10 per cent for the next 12 months.