The survey measures and tracks the experience, confidence and sentiment of SMEs, including small accounting practices, doing business in Ireland. The inaugural survey took place in April 2025 followed by the second survey in October 2025.
The sharp rise in SME pessimism is unsurprising given that just one quarter (25%) of companies reported increased profitability, compared to 32% in October 2025.
Cost pressures continue to rise, with 84% reporting an increase in business costs. 38% of SMEs cite staff costs as the biggest financial challenge, while 54% say rising costs are the biggest challenge affecting competitiveness, highlighting the growing risk to SME viability and growth.
Recent global events are also weighing heavily on SMEs, with almost half of business owners (48%) ranking geopolitical uncertainty and associated cost and supply chain impacts as the biggest challenge to their business over the next 12 months.
This uncertainty is reflected throughout the survey findings with one-third (33%) of SMEs stating that energy costs and energy security have the greatest impact on their business operations when it comes to infrastructure.
Cróna Clohisey, Director of Members and Advocacy, Chartered Accountants Ireland said:
“These findings point to a worrying trend for SMEs, with cost pressures intensifying and profitability declining compared to six months ago. SMEs are being squeezed from all sides – by rising wages needed to retain staff, persistent increases in day-to-day operating costs and energy and regulatory pressures, making it harder to maintain margins and retain staff. These are no longer temporary headwinds; they are embedded challenges that are eroding margins, weakening competitiveness and driving a much more cautious business outlook. As a result, more businesses now expect to be worse off (29%) than better off (28%) in the months ahead.
“There is also clear evidence that existing government supports are not reaching businesses effectively. While almost half of SMEs (47%) say that they need energy cost supports – up 19 percentage points in a year, less than one in 10 have applied and half (50%) of SMEs say these supports are not effective. Making these supports more accessible and more effective must now be a priority.”
SME priority areas
Reducing the regulatory and compliance burden remains the area most in need of government support (54%), even higher than demand for tax relief or access to grants or loans.
This theme is also reflected in SMEs’ priorities for Ireland’s upcoming Presidency of the Council of the EU, with two-fifths (40%) of businesses calling for simplification of EU regulatory requirements.
Businesses also identified priorities for Budget 2027, with 28% of respondents citing the indexing of income tax credits and bands as their top priority.
Ms Clohisey continued:
“We’re also hearing directly from businesses about the growing pressure on take-home pay for both owners and employees. With living costs continuing to rise, it’s becoming harder to retain staff and plan ahead. It’s no surprise that 28% of SMEs are prioritising the indexing of income tax credits and bands - this is about easing the pressure on households as well as businesses.”
Eoin Christian, CEO, GRID Finance said:
“As an organisation that works closely with SMEs, it is crucial for us to understand their outlook. This survey sheds light on the key challenges businesses are facing, including rising costs and geopolitical uncertainty.
“Despite these growing challenges and the downturn in profitability, it is notable that the demand for borrowing remains largely unchanged. This suggests that while their economic outlook has weakened, the demand for borrowing has not slowed down. GRID Finance can help SMEs find their way through this tumultuous economic environment with the right supports.”
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