SMEs feeling less confident in economic recovery

Isme study finds that owner-managers worried about economy

Isme chief executive Mark Fielding said the latest survey results gave cause for concern

Isme chief executive Mark Fielding said the latest survey results gave cause for concern

 

Business confidence is waning with SMEs feeling increasingly pessimistic about the economy, according to the latest quarterly business trends survey by the Irish Small and Medium Enterprises Association (Isme).

The survey of 932 businesses showed a reduction in 11 of the 12 indicators used to gauge confidence among small and medium-sized enterprises.

According to the study, business confidence fell by 50 per cent to 39 per cent in the quarter under review while expectations were down 65 per cent to 57 per cent. The declines come after steady increases over the past 12 months.

The report indicates that SME owner-managers perception of the business environment is broadly unchanged but that profitability expectations have fallen 9 per cent to 25 per cent after two quarter rises.

Current sales and sales expectations have reduced as have current and future investment levels. Business owners said exports had also declined since the last quarter.

“Despite the exceptionally strong net exports, mainly from the Foreign Direct Investment (FDI) sector, which on GDP figures alone made Ireland the fastest growing economy in the EU in 2014, the domestic facing SME sector continues to struggle out of the recession. The better macroeconomic environment has boosted tax revenues and helped achieve fiscal targets while the quantitative easing has devalued the euro, giving a boost to exports, the reality for SMEs is that the recovery is glacially slow and patchy,” said Isme chief executive Mark Fielding.

“We believe that the Irish economy will grow strongly in 2015 from a macroeconomic perspective, however the rebalancing of the domestic sector is slower than anticipated and the results of this SME Trends Survey for Q1 2015 give many reasons for caution,” he added.