Costs of running a business continue to rise

NEW RESEARCH shows that costs are rising for businesses, despite widespread claims that Ireland’s competitiveness is improving.

According to a quarterly business monitor undertaken by InterTradeIreland, the body which promotes North-South economic co-operation, 82 per cent of businesses believe business costs will remain high over the next 12 months, though businesses in Northern Ireland were more likely than their counterparts to report rising costs.

Energy costs were the biggest drain on businesses in the last quarter of 2010, with 69 per cent of businesses reporting an increase in energy costs, and 37 per cent switching supplier. Some 59 per cent experienced an increase in transport costs, while 57 per cent saw their rates and taxes increase, the survey found.

A rise in supplier costs is also having an impact on businesses north and south of the Border, with half of those surveyed indicating they are experiencing rising prices from many suppliers.

A thousand business managers from both sides of the Border were interviewed for the survey which was conducted last month.

The monitor also highlighted the tough trading environment being experienced by businesses, with 52 per cent of respondents reporting a fall in sales between October and December, while only 19 per cent experienced an increase in revenues. The findings were broadly similar for businesses on both sides of the Border. The hotel and catering industry appear hardest hit, with 71 per cent reporting declining sales.

The picture was brighter for those businesses involved in exporting, with 28 per cent reporting increased sales, and 44 per cent expecting sales to increase over the next 12 months, underlining the widely held view that exporting businesses will drive economic growth.

InterTradeIreland’s director of strategy and policy, Aidan Gough, said the strong performance of exporting companies pointed to the need for increased trade between North and South.

According to the monitor, a quarter of companies surveyed engage in cross-Border trade, with 32 per cent of Northern Irish companies selling in to the Republic and 22 per cent of southern-based companies trading northwards.

Noting that the latest business monitor was one of the “least optimistic” undertaken by InterTradeIreland, Mr Gough said this may reflect the adverse weather during the period and the arrival of the IMF in November.