Irish economic optimism continues to outshine Eurozone counterparts

Press release

Irish economic optimism continues to outshine Eurozone counterparts

15 Jul 2024

• Upcoming US election and ongoing conflicts fail to dent Irish business optimism, according to new Grant Thornton Q2 International Business Report;
• Despite positive outlook, energy costs remain the chief concern of Irish firms, with 43% identifying utility bills as main growth constraint;
• Irish business community lags behind in terms of innovation with just under a quarter (24%) expecting to increase R&D investment compared to 48% of Eurozone and 60% of global peers.

New research released today by Grant Thornton has revealed that Irish businesses’ optimism about the outlook of Ireland’s economy for the next 12 months remains buoyant, with almost three quarters (73%) of Irish medium sized companies surveyed predicting a positive future according to the latest International Business Report (IBR) which provides insights into the attitudes of 10,000 mid-market businesses across 28 economies. 

The study identified a notable difference in the level of optimism between Ireland and its European counterparts, with a Eurozone average of 59% forecasting a positive economic outlook for the next twelve months.

This positive sentiment flowed through in the IBR’s findings about participating Irish firms’ level of confidence in their future predicted business performance, with almost three fifths of the companies surveyed predicting their revenues (57%), profits (59%), and headcount (52%) to increase over the next 12 months.

Key to the contrasting moods is Irish businesses’ belief that geopolitical disruption is unlikely to prove to be a constraint on their ability to grow, with only 17% of Irish firms surveyed registering it as a concern, compared to a Eurozone average of 42% and a global average of 49%.

This level of confidence is also reflected by the finding that only about a quarter (27%) of Irish companies see economic uncertainty as a barrier to growth, compared to almost double their European (46%) and global (55%) peers believing that it would be a negative factor.

Despite the positive outlook, energy costs continue to weigh on the mood of the Irish business community, with over two fifths (43%) of firms identifying utility bills as their main growth constraint.

While it has been singled out as the chief negative influence, the level of pessimism relating to energy costs at the end of the second quarter of this year is notably different to when concerns peaked at 69% in the H2 2022 IBR report.

The research study also found a significant difference in attitudes to innovation between participating Irish firms and their international peers, with just under a quarter (24%) of Irish businesses prepared to increase R&D investment over the next twelve months compared to approximately half (48%) of their Eurozone and three fifths (60%) of their global peers.

There was a similar gap in levels of planned technology investment, with just under half (48%) of Irish companies budgeting for an increase compared to 58% of European and 67% of global medium sized firms.

Despite Irish medium sized firms being relatively hesitant to invest in innovation, there were still positive signs emerging from the research, with an increase in the number of companies planning to invest in AI, with 39% budgeting to invest in AI technologies and workflows over the next twelve months, up from 24% in the last round of research.

Commenting on the latest International Business Report, Grant Thornton Head of Deal Advisory Patrick Dillon said:

“Despite current and potential geopolitical risks on the horizon, Irish businesses are remarkably positive in their outlook for the future. Having navigated the pandemic, the cost-of-living crisis and disruption in global supply chains in recent years, these firms have proved their resilience and have a noted level of confidence in an uncertain world. It will be important, however, not to rest on our laurels by overlooking the opportunity to invest in innovation in order to gain a competitive advantage in a global marketplace.”

Experts / Authors

Patrick Dillon

Patrick joined Grant Thornton in 2005 and is Head of Corporate Finance in Ireland. His main area of expertise is in Merger & Acquisitions and Transaction Advisory Services.