Brexit uncertainty weighs heavily on Irish SME sector
New report suggests ongoing uncertainty is causing negative trends in several areas
An Anti-Brexit demonstrator protests outside the Houses of Parliament, in Westminster, London. Photograph: Hannah McKay/Reuters
The Brexit uncertainty is finally taking its toll on the Irish SME sector a review of 15 indicators impacting on the sector shows.
The latest SME Market Monitor, published by Banking and Payments Federation Ireland (BPFI), points to a range of negative trends including a sharp fall in consumer sentiment and a fall in retail sales for the third month running.
It also highlighted a slowdown in visitor numbers from Britain, which have been overtaken by visitors numbers from mainland Europe for the second quarter in a row.
The barometer trackes 15 different indicators which are important for the performance of the SME sector.
Despite weathering the initial uncertainty of Brexit, this continued indecision is negatively affecting SMEs who now need to ramp up their preparations for the possibility of a no-deal Brexit, it said
“In the midst of continued improvements in disposable income and widespread job opportunities, consumer confidence since July last year has fallen off considerably, as the likelihood of either a no-deal Brexit scenario or indeed an extension of Article 50 have progressively increased,” Annette Hughes, director of EY-DKM Economic Advisory, said.
“ Our analysis shows that consumers are struggling to balance the possibility of an undesirable Brexit outcome with the reality of favourable macroeconomic conditions and there is evidence that this is starting to impact the sectors where SMEs tend to operate, such as retail, food and accommodation - sectors which are arguably also some of the most vulnerable to Brexit,” she said.
And while Ms Hughes points to some of the factors which may mitigate the impact of Brexit uncertainty, such as the strength of the Irish economy, a healthy labour market and double-digit growth in new lending to SMEs, she cautions that the short-term outlook for SMEs is a growing concern.
“Ultimately, the prospect of a no-deal Brexit or indeed an extension of Article 50, in tandem with a slowdown in some of the Eurozone’s largest economies remains a serious downside risk,” she said.
“ As a consequence, and notwithstanding Ireland’s strong macroeconomic performance, a great deal of caution is warranted in regard to the short-term outlook,” she said.