Irish companies predict positive future

Irish economic optimism continues to outshine Eurozone counterparts but more innovation needed to compete with other countries

New research released by Grant Thornton has revealed that Irish businesses are optimistic about the outlook of the Irish economy for the next 12 months as almost three quarters (73%) of medium-sized companies predicted a positive future when surveyed.

According to the latest International Business Report (IBR), which provides insights into the attitudes of 10,000 mid-market businesses across 28 economies, there is a notable difference in the level of optimism between Ireland and its European counterparts, with a Eurozone average of 59 per cent forecasting a positive economic outlook for the next twelve months.

This positive sentiment flowed through in the IBR’s findings about participating Irish firms’ level of confidence in their future with almost three fifths of the companies surveyed predicting their revenues (57%), profits (59%), and headcount (52%) to increase over the next 12 months.

Key to the contrasting moods is Irish businesses’ belief that geopolitical disruption is unlikely to prove to be a constraint on their ability to grow, with only 17 per cent of Irish firms surveyed registering it as a concern, compared to a Eurozone average of 42 per cent and a global average of 49 per cent.

Patrick Dillon, Head of Deal Advisory, Grant Thornton said, ‘Despite current and potential geopolitical risks on the horizon, Irish businesses are remarkably positive in their outlook for the future. Having navigated the pandemic, the cost-of-living crisis and disruption in global supply chains in recent years, these firms have proved their resilience and have a noted level of confidence in an uncertain world.’

Despite the positive outlook, energy costs continue to weigh on the mood of the Irish business community, with over two fifths of firms identifying utility bills as their main growth constraint.

While it has been singled out as the chief negative influence, the level of pessimism relating to energy costs at the end of the second quarter of this year is notably different to when concerns peaked at 69 per cent in the H2 2022 IBR report.

Innovation Concerns

The research study also found a significant difference in attitudes to innovation between participating Irish firms and their international peers, with just under a quarter of Irish businesses prepared to increase R&D investment over the next twelve months compared to approximately half of their Eurozone and three fifths of their global peers.

There was a similar gap in levels of planned technology investment, with just 48 per cent  of Irish companies budgeting for an increase compared to 58 per cent of European and 67 per cent of global medium sized firms.

Encouragingly, the research did show an increase in budgeting for AI over the next 12 months with 39 per cent planning to invest in AI technologies and workflows over the next twelve months, up from 24 per cent in the last round of research.

Patrick Dillon added, ‘It’s important not to rest on our laurels by overlooking the opportunity to invest in innovation in order to gain a competitive advantage in a global marketplace.’