Smoother start to year for businesses - but cost issues and the skills squeeze persist

Collage of technology in business and objects.
Collage of technology in business and objects.

THE mood music among businesses in Ireland suggests a solid start to this year, with the number of firms reporting that they are on a stable footing now sitting at a four-year high.

Some 36 per cent are enjoying growth, while a third of businesses are optimistic about sales increases in the next six months.

But the findings, contained in InterTradeIreland’s latest all-island business monitor, shows the number of businesses experiencing rapid or moderate growth is three times higher for large firms than for small firms.

Martin Robinson, the cross-border body’s director of strategy, says: “Some 44 per cent of large firms are growing compared to 14 per cent of businesses at the opposite end of the scale – that is a real contrast.

“We know that businesses that export enjoy higher rates of growth and profitability, yet only one in five firms surveyed are selling across the border.

“The cross-border market is a natural first step particularly for small firms to begin their export journey, and I would encourage businesses to take advantage of the wide range of trade information, advice and practical support that InterTradeIreland provides to help grow cross-border exports.’’

The pressures businesses have been adjusting to over the last number of quarters – rising energy bills and raw material costs - are still the main issues dominating concerns, but their impact appears to be reducing in scale as there is some easing of inflationary pressures and less volatility in the energy markets.

Recruitment has been a consistent issue for SMEs but until recently has largely been overshadowed by rising energy and costs. However, a skills squeeze is a headwind that could constrain growth.

Martin added: “While two in three businesses have passed on price increases, this strategy is not sustainable in the long-term. It is concerning that half of firms report that they have not yet tried to put sufficient measures in place to combat costs or resolve skills issues.

“Firms need to adopt digitalisation and sustainability practices that enable them to reduce costs and their reliance on skills in what is currently a constrained labour market.”