Business sentiment weakens as Brexit and trade fears weigh

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Business sentiment weakens as Brexit and trade fears weigh


KBC Bank Ireland chief executive Wim Verbraeken
KBC Bank Ireland chief executive Wim Verbraeken

Irish business sentiment has weakened since the spring as geopolitical uncertainty weighs on firms’ expectations.

Although firms were still positive on the whole, with stronger output and hiring in the last three months, concerns about Brexit and trade tensions meant they were more guarded.

A sentiment index, published by KBC Bank Ireland and Chartered Accountants Ireland, published its weakest reading since spring 2017.

KBC Bank Ireland chief economist Austin Hughes said: “While the number of companies reporting job gains in the past three months is four times the number of companies reporting job losses, it is clear that confidence is being affected by a range of threats running from Brexit and trade tensions internationally to domestic concerns such as housing and overheating risks.

“Although there has been a great deal more heat about Brexit recently, there doesn’t appear to be a great deal more light.

“Only 7pc of companies say the consequences for their business operations have become clearer of late while 17pc say they have gotten less clear.”

The survey asked companies what they wanted from the upcoming Budget and found an equal split between those prioritising spending on housing and health, and those wishing to avoid overheating of the economy.

On Brexit, companies felt the most likely negative consequences were reduced market access and an increased regulatory burden.

Chartered Accountants Ireland CEO Barry Dempsey said Irish companies needed to prepare for the possibility of a hard Brexit. Yesterday Airbus boss Tom Enders bashed UK Prime Minister Theresa May’s “unravelling” Brexit plan, following on similar criticism levelled on Tuesday by his counterpart at engine-maker Rolls-Royce.

Airbus is activating contingency plans and will stockpile parts in preparation for border delays after the UK exits the EU next year, Mr Enders said yesterday at the Farnborough air show southwest of London.

The French planemaker operates a so-called just-in-time production system and makes wings for its planes at a plant in Broughton, Wales. Mr Enders said the company needs to create an inventory buffer to insure against any shortages.

Airbus has been one of the most outspoken business voices warning about the threat and cost of new border controls after Brexit.

While the release of Mrs May’s white paper earlier this month had given companies some optimism, that feeling is now dissipating. (Additional reporting Bloomberg)

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