Winners and losers in a highly competitive market

More firms are beginning to plan for Brexit but still have very little idea about the outcome they are working towards says ITI director Aidan Gough
More firms are beginning to plan for Brexit but still have very little idea about the outcome they are working towards says ITI director Aidan Gough

Levels of business growth are at their highest levels since 2011 but behind the headline figures lie challenges and uncertainty according to the cross-border agency InterTradeIreland.

Published this morning, the latest Business Monitor covering the second quarter (Q2) from April-June 2018, shows that the number of firms across the island reporting growth remains high at 46%.

However, it also reveals that there is growth in the number of firms in decline.

The spread of uncertainty is reflected in the up-tick in issues impacting business, across a wide spectrum of challenges. In particular, the report shows that energy and overhead costs such as wages and recruitment are major concerns for firms across the island.

Overall, across the business landscape smaller firms are finding the terrain tougher.

On a sectoral level, the number of retail businesses reporting to be in difficulties has increased.

This is also true for construction firms although 53% of firms are reporting that new competitors are entering the market, while more than half say profit margins remain tight.

Meanwhile in manufacturing, 27% of businesses are reporting they have spare capacity - a big increase over the previous quarter.

Over a quarter of professional services businesses are reporting they plan to increase their level of staff training and upgrade IT systems; this investing in skills would suggest the sector anticipates more growth.

There has also been a rise in the number of firms struggling to recruit for the appropriate skills. This stands at just over a quarter of businesses across the island.

This sense of mixed signals from the wider economy is compounded by the lack of clarity around Brexit which is leading many firms to defer investment with nearly one in four (24%) saying that it will have an influence on this area of decision making, while 30% say they are concerned about the impact on sales.

The report does note, however, that close to 20% of SMEs are starting to put plans in place for when Britain leaves the EU.

“The number of firms preparing for Brexit is increasing all the time,” said ITI director of strategy and policy Aidan Gough.

“We see this in the demand for our supports and services. In particular, our Brexit Advisory Service which offers bespoke help and assistance for SMEs, including a £/€2,000 Brexit Start To Plan Voucher, has seen a big spike in demand.

“However, businesses can’t afford to be complacent, as 80% of firms still have no plans to deal with Brexit.”