Business optimism drops to 5-year low, says BDO
CONFIDENCE in future business prospects has fallen to a five-year low because of Brexit uncertainty, a new survey has found.
BDO's quarterly Optimism Index found that while business hopes of revenue growth in the coming year remain on the upside, a majority of businesses polled now expect Brexit to bite into their profits.
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The quarterly index measuring business outlook reached a peak of 70.3 in the second quarter of 2018 but has fallen over the past year to 62.8, an 11pc drop and roughly equal to the levels recorded at the end of 2014 when Ireland was emerging from its EU-IMF bailout.
The survey published yesterday found that 63pc of Irish businesses expect Brexit to harm their bottom line, nearly double the level recorded by the same survey three years ago following the UK's vote to leave the EU. A quarter of businesses said they expect their trade to decline in the current quarter.
Carol Lynch, a partner in BDO Ireland's customs and international trade services department, said the growing signs of business pessimism were "most likely sparked by the UK leadership change towards a more hard-line Brexit government".
"Although we are still unsure about the full impact Brexit will have, one certainty is that once Britain leaves the EU there will be a requirement for exporters and importers to make declarations and pay customs duties. This will involve costs for customs compliance and additional costs associated with potential delays at borders," she said.
"Recent reports on warehousing space reaching near-capacity provides some insight into the levels of readiness among larger businesses in Ireland. But disruption to trade agreements will be an issue that will affect businesses of all sizes in Ireland, not just those who have warehousing space to stockpile product."