Brexit sees business optimism dip to recession levels
Brexit and slowing global economic activity have pulled businesses' growth expectations to their lowest in almost nine years, according to a new survey from AIB.
The survey, published today, also showed that as the unemployment rate has dropped sharply with record numbers now in work, businesses said that shortages of skilled labour were now a concern.
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"Behind this has been a steady slump in manufacturers' expectations, which are now the lowest in exactly 10 years," the AIB report said.
"In fact, since the survey started in 2006, confidence among goods producers has only been weaker during the height of the global financial crisis in 2008-09," it added.
With a second Brexit deadline looming in just over 100 days amid a leadership contest in the ruling Conservative Party it appears that a "hard Brexit" is becoming a more likely outcome as the two contenders, Boris Johnson and Jeremy Hunt, compete for the votes of party members who are markedly more anti-EU than the wider electorate.
Despite the decline, the survey showed that a net 32pc of the 650 manufacturing and service sector firms still expect activity to rise this year.
That means Irish businesses are more optimistic than those in all other countries apart from Brazil, said the survey which uses data from HIS Markit's Purchasing Managers' Index.
Despite the concerns over Brexit and global trade, optimism regarding investment spending is at its highest level in a year at plus 19pc. Elsewhere in the world the rising tide of trade disputes appears to be dampening investment plans and the risks were cited by Federal Reserve Chair Jerome Powell in Capitol Hill last week.
While the investment outlook appears to be bullish, the profit outlook was less so, and the survey showed that 18pc of businesses expected profits to rise, the second lowest percentage since late 2011, when Ireland was in the midst of its economic crisis.
Costs are rising in large part because of increasing wages in a tight labour market and 56pc of firms here are anticipating higher average staff payments.