The impact of Brexit is reducing as a major concern for businesses here but soaring costs have replaced it among major issues, a new report has shown.
ome 27% of business in Northern Ireland and the republic said Brexit was an issue for them during the third of quarter of the year. But that’s down from 35% during the previous period, according to the latest business monitor report from InterTradeIreland.
But the vast majority of companies across Ireland (92%) say they expect further significant rises in costs in 2023, while 90% of firms have experienced a significant increase in their energy costs.
Brexit is having a bigger impact on businesses here, with 35% raising it as a concern, compared with 24% in the Republic.
And the latest survey shows business growth is slowing, while just 18% of firms are predicting increased growth over the next six months.
“There is a great deal of uncertainty in the wider economy – with rising inflation, interest rates and a volatile energy market,” Martin Robinson, InterTradeIreland’s director of strategy says.
“The road ahead looks to have a number of caution signs for business. While the majority of firms that we speak to are in a stable position, the number in growth mode has dropped to just over a third, compared to 41% for the same period last year.”
“In terms of Brexit, 27% of firms have reported it as an issue this quarter, compared to 35 per cent of businesses in the previous quarter. Half of firms report that they have adapted in full or to a large extent to the changes brought about by Brexit.”
Around half of firms said they had either adapted in full to Brexit, or to a large extent, while 12% said they hadn’t adapted at all.
The latest data shows that while sales and profits remain relatively buoyant, quarter-on-quarter, a pattern of slowing growth is emerging as rising costs pile on the pressure.
Turning to profit, firms across Ireland had a better quarter than the previous three months. Some 66% of companies said they were in profit – up 10% on the previous quarter.
Meanwhile, around 73% of businesses said they had increased they price which they charged for their products in the last 12 months, amid rising input costs.
And as expected, energy and the rising costs of other overheads are the overwhelming concerns for SMEs. The impact has been particularly acute for the manufacturing industry with over 20% now indicating they are contracting.
“However, no sector is immune. Over a fifth of businesses expect their sales to decrease in the next six months – this jumps to 41% of companies in the leisure, hotel and catering sectors,” it says.
“Our data shows us that 90% of firms have experienced a significant increase in their energy costs, and that is feeding through to nearly half experiencing a large increase in supplier costs, while 44% have experienced a substantial increase in transport costs.
According to the survey, 73% of businesses have passed on price rises to their customers in the last 12 months and profitability remains stable.
“Firms are also reporting that cost increases have not as yet impacted business and consumer confidence quarter-on-quarter,” it says. “However it remains to be seen what will happen if firms continue to pass on price rises – in particular as nine out of 10 firms expect the rising costs of doing business to persist over the next 12 months.”
Mr Robinson says: “We know that businesses that trade cross-border, tend to be more robust. However, businesses across the island are operating against a difficult backdrop and their resilience continues to be tested.
“There are a number of supports out there for firms, including from InterTradeIreland. We will continue to collaborate with partners and actively review our range of programmes to ensure we can help firms in the current challenging economic landscape.”