Stable Irish Business Sentiment Reading Reflects Contrasting Influences

Nov 01, 2016

Chartered Accountants Ireland / KBC Bank Business Sentiment Survey, Winter 2016


  • Irish business sentiment stabilises in 3rd quarter after sharp 2nd quarter fall.
  • Some easing in the pace of activity growth and new hiring may reflect Sterling impact as well as a more cautious Irish consumer.
  • Broader than expected Brexit effects may be suggested by slowdown at a range of consumer-focussed companies.
  • Businesses cautious but pessimism about Irish economy eases slightly as immediate Brexit impact less traumatic than feared.
  • Surprising cost uptick may reflect firmer energy and payroll costs. Could pricing policies be throwing up unexpected results?
  • Brexit and uncertain global outlook seen as key business concerns for 2017.


Tuesday, 1st November, 2016. 

After a sharp pull-back in Irish business confidence in the summer survey that significantly reflected the influence of the UK vote to leave the EU, the KBC Bank/Chartered Accountants Ireland business sentiment index was effectively unchanged in the most recent three-month period to late October. The October reading reflects notable but largely offsetting movements in various elements of the business sentiment survey. As such, the details of the survey hint at notable changes in the Irish business climate of late.

A clear, if contained, slowdown in the pace of increase in activity and employment was reported by companies responding to the survey, particularly by those selling consumer goods and servicesWe interpret this as highlighting the pervasive natureacross Irish economic sectors of the difficulties posed by Brexit.

Acting in the opposite direction was a partial reversal of the sharp drop in business confidence in the broader Irish economic outlook that had followed the UK referendumvote to leave the EU. While companies remain cautious, the absence of a more immediate and more widely seen deterioration in Irish economic conditions may have eased some more extreme fears.

It might be suggested that the previous reading of the business sentiment survey captured the knee-jerk reaction of companies to the UK ‘Brexit’ vote in that it emphasised emerging concerns but didn’t report any instant impact on activity levels.

Perhaps, surprisingly, the most notable easing in business growth came in the area of consumer goods and services which reported quite a marked stepdown in growth from particularly buoyant responses given to the previous survey. This result seems broadly consistent with a more cautious tone to recent consumer sentiment readings as well as somewhat softer retail sales and spending tax data of late.

Commenting on the results, Chartered Accountants Ireland Chief Executive Pat Costellosaid:

“The broadly stable business sentiment index reading may be a little misleading in that the details of the survey suggest notable but broadly offsetting changes in the business climate affecting Irish based firms; growth in activity and hiring has clearly moderated of late and while Brexit is a major concern, companies are also signalling some relief that the immediate fallout of the UK vote has not been as severe as some of the more apocalyptic predictions had envisaged.”

Austin Hughes, Chief Economist, KBC Bank Ireland, who carried out the analysis, said:

“One slightly surprising aspect of the survey is that firms supplying consumer goods and services reported the most notable pull-back in growth of late. This probably owes something to a cautious Irish consumer but it may also reflect some Brexit related issues in areas such as retailing or the hospitality sector stemming from current Sterling weakness. If we are correct in this interpretation, the survey suggests that adverse Brexit impacts may be felt much more widely across the Irish economy than is sometimes suggested.”

Pat Costello also said:

“While companies are focused on a wide range of concerns in an increasingly uncertain global economic environment, the survey clearly signals that Brexit is seen as the major external influence likely to affect business outcomes in the year ahead. Importantly, such views are common across sectors rather than concentrated on a few specific areas. The survey also suggests that vulnerability to, and readiness for, the impacts of Brexit varies widely, even across firms in the same sector.”

Commenting further, Austin Hughes said:

“In marked contrast to the frequently painful experience of the austerity years, very few companies see the recent Budget materially altering their business prospects for the coming year. A small number of firms see the Budget enhancing the outlook for Foreign Direct Investment, increasing the likelihood that they will take on additional employees, but the economic and fiscal progress of recent years means the Budget is no longer a ‘make or break’ event for Irish business.” 

The KBC Bank Ireland / Chartered Accountants Ireland Business Sentiment Survey reflects the view of Chartered Accountants working in senior positions (CEOs, MDs and FDs) in Ireland’s leading companies.  The Autumn 2016 survey was conducted from 14th to 21st October 2016 and the results presented are based on 330 completed responses.

Read the full report here.


For reference:

Sinéad Healy, Gibney Communications, 01 661 0402 / 086 061 2441

Austin Hughes, KBC Bank, 087 669 6972
Brendan O'Hora, Marketing Manager, Chartered Accountants Ireland, 01 637 7298