Most SMEs on the island of Ireland do not have a Brexit plan in place, according to a recent AIB index.
In the Republic of Ireland, only 6% of SMEs said they have a formal plan in place for Brexit, while in the North, a mere 2% said they did, according to the AIB Brexit Sentiment Index for Q4 2017.
Certain sectors showed more negative views than other, with notable differences on either side of the Irish border.
In Northern Ireland, retail (-45) and hospitality and tourism (-34) sectors were the most negative about Brexit, while in the Republic, manufacturing (-49) and hospitality and tourism (-40) sectors were the most downbeat, according to the research.
The index also revealed that of the SMEs in the Republic focused on export, almost a quarter (23%) are exploring options to expand into new European markets, particularly in Germany and France.
One in ten (10%) SMEs in the Republic which had plans to invest their business prior to the Brexit referendum are currently reviewing them, while 8% have either cancelled or postponed them indefinitely.
In the North, this trend becomes more pronounced, with almost a quarter (23%) of businesses that planned to invest before Brexit having cancelled or postponed these plans and 6% currently reviewing them.
“As the reality of Brexit is landing with Irish SMEs, the second wave of AIB Brexit Sentiment Index indicates that many SMEs are not yet prepared for the potential consequences of Brexit,” said Catherine Moroney, head of business banking at AIB. “ The index also shows that many SMEs are holding off on investment and expansion plans due to the uncertainty caused by Brexit. It is promising to note, however, that one in five SME exporters in ROI are now considering new international markets, with France and Germany topping the list of destinations.”
She continues, “AIB is encouraging SMEs to begin preparing now to offset some of the challenges they may face in the coming months and years. We are here to help them with planning. AIB also has a team of Brexit Advisors across the country available to assist SMEs assess their investment and expansion plans.”
The weakness of the Sterling continues to have a considerable impact on the cost of sales for SMEs on the island of Ireland, but in the North in particular, the index shows. Almost two thirds (62%) of SMEs in the North report a higher cost of sales because of Brexit, with the most impacted sectors being retail and tourism.
“In the Republic, adverse currency movements have been identified as being by far the main negative impact on business to date of Brexit, which is hardly surprising given the reliance on the UK market for those SME firms that do export,” said Oliver Mangan, AIB chief economist.
Additionally, SMEs on both sides of the border report that a dip in consumer confidence and spending, combined with a degree of uncertainty are the main impacts that Brexit is having on their business at the moment.
This is, again, particularly noticeable among SMEs in the North, where consumer confidence and uncertainty have overtaken currency fluctuations as the biggest factors with over one in seven (15%) SMEs citing this as a major concern.
AIB’s Brexit Sentiment Index conducted by Ipsos MRBI, is a quarterly survey of more than 700 SMEs, 500 in the Republic of Ireland and 200 in Northern Ireland, that assesses the attitudes of SME business leaders on Brexit and its impact on their businesses, according to AIB.
© 2018 - Checkout Magazine by Kevin Duggan