Business and consumers increasingly concerned about Brexit

Brexit is already having a negative impact on many Irish companies, according to a new survey that shows business sentiment improved at the start of the year following a marked decline last year.

The latest KBC/Chartered Accountants Ireland business sentiment index reveals that many firms expect growth in volumes this year but are increasingly cautious on hiring, due in part to acclearting wage costs and wider geopolitical concerns.

The index showed a reading of 104.8 for the fourth quarter, a modest improvement from the 100.1 seen in the prior indicator but well below the peak reading of 131.1 recorded a year ago.

As many as 40 per cent of companies surveyed for the indicator said they are already feeling the impact of Brexit with negative effects outweighing positives by about ten to one.

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Consumer sentiment on the slide

Separately, new research reveals Irish consumer sentiment has fallen substantially since the UK voted to leave the European Union with most households expecting to cut back on spending due to concerns over the strength of the Irish economy.

The Red C poll shows 39 per cent of consumers expect an improvement in the economy, compared to 48 per cent in October.

Moreover, some 77 per cent of consumers surveyed said they were worried abou the impact Brexit will have on Ireland, up from 72 per cent, the last time the survey was conducted.

The survey finds that just 20 per cent of consumers expect to see their disposable income rising over the next six months, as against 27 per cent in October. In addition, some 21 per cent say they are struggling financially, a rise of 2 per cent.

Some 71 per cent of consumers said they believed an economic recovery was underway in Ireland, but almost 1 in 3 said it had not benefitted them personally.

Just 15 per cent said the recovery had made it easier to buy or rent their own home with 1 in 5 feeling it has helped resolve social housing problems in Ireland

Unsurprisingly, spending is expected to drop in all categories, except holidays over the next six months, with a marked decline in money spent on entertainment/socialising.

In a worrying trend for Irish retailers, 29 per cent of those surveyed said they had benefited from the decline in sterling by purchasing more goods online directly from the UK since the Brexit vote took place last June.

Spending on the up in January

New figures from Visa meanwhile, show consumer spending rose 4 per cent year-on-year in January with online shopping fuelling growth.

The latest data, which measures expenditure across all payments types, show face-to-face transactions fell 0.7 per cent year-on-year while ecommerce transactions were up 12.3 per cent.

All bar one of the eight monitored sectors saw spending increase over the year to January, the exception being clothing and footwear where a 1.9 per cent decline was recorded.

The sharpest increase in expenditure was in transport and communications, up 10.8 per cent year-on-year.