Sentiment slumps as 80pc of firms feel Brexit will have an impact on them
Business sentiment weakened considerably in recent months to its lowest level in three-and -a-half years, as concerns about the Brexit vote and the global economy dented confidence, a survey shows.
Confidence in the Irish economy has been downgraded, with the UK vote on June 23 seen as a key risk, but not the only one, according to the KBC Bank Ireland / Chartered Accountants Ireland Business Sentiment Index.
About 80pc of companies surveyed now see some implications of Brexit for their companies, with sterling weakness the main concern.
Pat Costello, Chartered Accountants Ireland chief executive, said the drop in sentiment should be seen as a recognition of the increased risks facing the Irish economy, rather than a sign of panic or deterioration in conditions.
"Notably increased uncertainty of late and the particular threats posed by Brexit have prompted companies to downgrade expectations for the general economic environment but they continue to signal healthy growth in their own activities," Mr Costello said.
The business sentiment index dropped to 99.9 in the past three months, from 117.7 in the spring.
That's the sharpest quarterly fall since the third quarter of 2010.
"As such, it clearly signals a marked change in the mood of Irish business of late," the joint KBC and Chartered Accountants Ireland report states.
Despite the gloomy sentiment, business activity remains steady, softening just marginally.
Activity has continued to increase in all the main business areas.
"The food sector did see a notable easing in the proportion of companies reporting increased activity levels of late, a result that could owe something to the recent weakening in sterling," the report notes.
"However, responses from firms in this sector still point to a strongly positive balance that remains comparable with that seen in other sectors."
As well as the Brexit vote, slowing global demand is still widely seen as a significant concern.
And the domestic political situation is also worrying about 20pc of those surveyed.
The survey was conducted between July 28 and August 11. The results are based on 321 completed responses.
"It is scarcely surprising that sterling weakness was flagged as the main concern and, with poorer UK economic conditions also featuring prominently, it is clear that near-term risks predominate," said economist Austin Hughes.