Brexit is causing businesses to defer investment decisions but is having very little impact on consumer savings, according to two surveys.
The Bank of Ireland/Economic and Social Research Institute (ESRI) savings and investment index for April indicates that 88 per cent of people believe Brexit hasn’t affected their saving habits.
Intertrade Ireland’s business monitor reveals that businesses are still pessimistic, however, with almost a third saying Brexit is still having a negative impact while just 11 per cent plan to invest in staff training. Of more concern is the fact that just 6 per cent of companies plan to spend money on research and development over the next 12 months.
But consumers are more sanguine according to Bank of Ireland and the ESRI. "The most surprising finding in this month's saving data is that Brexit continues to have very little impact on national saving patterns despite the ongoing uncertainty around what it could mean for the Irish economy. This suggests that savers are very much still basing their decisions on 'here and now' and not on what Brexit-related challenges might be around the corner," said Tom McCabe of Bank of Ireland investment markets.
While the bank’s overall index slipped, that was attributed to sentiment toward investment as the percentage of people who invest regularly fell to 34 per cent in April from an all-time high in March.
Some 50 per cent of people said they were saving regularly in April, up marginally compared to March, and the volume of those who thought it was a bad time fell to 25 per cent, the lowest level since January 2018.
External shocks
Meanwhile, Intertrade’s survey pointed to vulnerabilities among small and medium enterprises specifically with 34 per cent of micro companies recording profit margins of less than 5 per cent. They noted that a margin of this size leaves these companies vulnerable to external shocks.
Employment, too, remains static and almost 90 per cent of businesses haven’t increased or decreased their staff headcount in the past quarter. Sales have also been static with cross-border traders particularly badly hit.
"While the wider economy on the island remains resilient, there are further signs of difficulties generated by the uncertainty around Brexit. Businesses are cautious, and this could potentially impact on growth prospects," said Intertrade Ireland's strategy and policy director, Aidan Gough.
The Bank of Ireland/ESRI savings and investment index is produced monthly from a minimum sample of 800 consumers, while Intertrade’s survey takes the views of more than 750 business managers into account.
