Long-Term outlook for Business Remains Positive

Despite the weaker economic climate, business confidence for the future of an all-island economy remains resilient, with four out of every five respondents optimistic about their company’s performance over the next three years.

The first Annual Report of the Business Monitor published today by BT and InterTradeIreland, shows that whilst 78 percent of business agreed or strongly agreed that the credit crunch would impact on the economy in the coming 12 months, the majority of these felt the impact would be moderate.

Four thousand companies across the island, ranging from small enterprises to large multinationals, participated in the survey which is the largest of its kind in Ireland and the UK and the first produced on an all-island basis.  All the respondents were either Managing Directors, CEOs or company proprietors.

Despite the prevailing tough economic conditions evidence of an emerging and growing all-island economy is apparent in the findings. For instance 62 per cent of companies North and South do not intend to revise business targets downwards.

Indeed of the 41 per cent of companies engaged in cross-border trade, two thirds expect their volume of trade to increase in the coming months. While the state of the island’s infrastructure was a common area of concern to businesses, 53 per cent said planned investment would improve transport infrastructure over the next three years and 72 per cent of all companies surveyed believed this would help North South links.

BT’s chief executive Chris Clark said the findings show an economy under pressure but positive about the future.

“Around 80 per cent of businesses are optimistic about their company’s performance over the next three years,” he said. “However there appears to be a short-term issue because 78 per cent of companies admit the credit crunch is a serious issue with 77 per cent already noticing a tightening of expenditure by customers and competitors.”

“From working with organisations of all sizes across the island, those businesses who have created a sustainable business model, and are able to adapt quickly and use innovative solutions, are the most optimistic about facing the challenges posed by the credit crunch.”

InterTradeIreland strategy and policy director Aidan Gough said: “In tough economic times, trading on an all-island basis offers companies North and South a golden opportunity to grow their business by expanding into new markets which are right on their doorstep.”

"InterTradeIreland, which works towards removing barriers to doing business on an all-island basis, offers hard-pressed SMEs a range of financial, advisory and research support to help them do just that and, to work together, to push into lucrative international markets."

Gina Quin, CEO, Dublin Chamber of Commerce said that “the secure and stable political environment - North and South - has meant that there are increased cross-boarder growth and development opportunities available to businesses looking to expand their operations. This Monitor assists businesses with their investment and development decisions.”

Economist Marc Coleman, who analysed 12 months of results and provided a commentary on their impact, wrote in the monitor, “Businesses perceived lack of progress in addressing the North’s corporation tax rate is affecting the way government is viewed.  In the South the high cost of living and the level of business taxation are key concerns. And right across the island there is a very real concern about the ability of the education system to adapt to new economic realities.

Other key findings include:

- the number of firms expecting profits to rise in the coming quarter fell from 41 per cent to 31 per cent

- the share of construction firms expecting a decline in profitability over the next quarter trebled over the 12 months to April 2008 while the numbers expecting to lay off staff doubled.

- 86 per cent expected to increase or maintain employment in the coming three months

- 25 per cent of businesses stated that they had difficulty filling vacancies within their company, and some 7 to 10 of these respondents said that this was impacting adversely on their company’s performance

The Business Monitor is produced by BT and its partner InterTradeIreland in association with the Northern Ireland Chamber of Commerce and the Dublin Chamber of Commerce.