With less than two years to go to Brexit, an overwhelming 95 per cent of businesses in Ireland are still not actively planning for the event, according to cross-Border development agency InterTrade Ireland.
The finding, contained in its latest quarterly business survey, suggests most firms here are still adopting a wait-and-see approach to potentially the biggest shake-up in trading relations between the UK and Ireland in decades.
The agency said planning for Brexit remained a “real concern”, particularly as 22 per cent of all business on the island and 41 per cent of cross-Border traders say it is already having a negative impact on their business.
Despite the uncertainty of Brexit the agency’s report suggested cross-Border trade was thriving, with half of traders experiencing business growth compared to 36 per cent of businesses only doing trading in their own jurisdiction.
The survey found the increased growth, however, was not translating into a equivalent rise in employment, with only 7 per cent of firms reporting that employment levels have increased over the past quarter.
The reluctance to take on new staff against the positive market background may signal an improvement in productivity but may also reflect difficulties in recruiting appropriate skills, the agency said.
IT and finance firms here have been vocal about their difficulties in finding skilled staff.
In its report InterTrade Ireland also highlighted cost increases in overheads and through the supply chain as significant challenges facing businesses.
"A buoyant economy should not distract from the need to confront and prepare for challenges that lie ahead, especially in terms of dealing with rising costs, skills shortages and potential changes to trading relationships," said Aidan Gough, strategy and policy director at InterTradeIreland.
Tight margins
Mr Gough said that over 70 per cent of businesses were operating on very tight margins – below 10 per cent – and therefore carry a high exposure to rising costs.
“While we encourage businesses to concentrate on the day job and operational effectiveness, we also advise companies to use this time strategically to look at the possible impacts of Brexit,” he said.
“By asking relevant questions and working through different scenarios, businesses which have proved resilient in the past will discover new solutions and opportunities in the challenges that lie ahead,” Mr Gough said.
“With a healthy ambition to grow reported by 51 per cent of firms across the island, we are encouraging SMEs to plan, act and engage in preparation for Brexit as this is the key to stability and success in the future.”
