Confidence in firms plummets further as 'fear factor' takes hold
BUSINESS confidence in the Irish economy is falling despite an apparent stabilisation in certain business sectors.
The latest business sentiment survey from the Chartered Accountants of Ireland and KBC Bank has found what it calls "a remarkable divergence between firms' assessment of their micro-economic circumstances and the broader macro climate".
Some 58pc of respondents said they were less confident compared to the last survey three months ago when only 19pc of those surveyed had reported a drop in confidence.
The number of people more pessimistic about the country is now at its highest since the spring of 2009.
Despite the pessimism in the country overall, some businesses reported an improved performance in the last quarter, with 30pc of firms saying activity had increased in the past three months.
That was broadly in line with data going back to spring, but there is no indication that a broadly based recovery has begun.
Roughly twice as many firms are still cutting staff as hiring but 55pc of companies said their staffing levels had remained constant since the last survey.
KBC chief economist, Austin Hughes, said there was a "fear factor" now stalking businesses across the country.
"The lack of confidence in the economy as a whole is the one thing that stands out in the latest survey," he said.
Overall the survey's results are fairly similar to the last quarter yet confidence has fallen significantly.
"To us, this is proof that uncertainty has a cost. Businesses are looking at the banking crisis and waiting on the Government's four-year budgetary plan, as well as the wider concerns about a slowdown in the US and UK, and they simply don't know what to plan for," he added.
"Until the Government gives details of the four-year plan, most businesses are likely to hold off on employment or improving their business. They need to know what's coming down the tracks at them before expending more capital.
"We all know the figures will be bad, but once we get them then business will be able to begin planning in earnest for the future."
The survey follows similar research from the Small Firms Association that suggested that the economic decline was levelling out rather than improving.
In that survey, published earlier this week, half of respondents described the overall business environment as "poor" or worse.