With 100 days to go to Brexit, the number of SMEs being negatively affected has doubled in one year, according to AIB’s latest Brexit Sentiment Index.

The bank says that in the second quarter of this year 42% of SMEs south of the border said that their business was being negatively affected, up from 21% a year earlier.

In Northern Ireland, half the SME survey panel said their businesses are being negatively impacted by Brexit. 

Delays in implementing Brexit are also continuing to weigh heavily, with 37% of SMEs in the Republic and 40% in NI claiming the delay is having a negative impact on their business.

What the bank calls “a marginal improvement in overall sentiment” of two points in the index itself disguises fundamental underlying concerns that many SMEs have about Brexit, and how it is already affecting their businesses in terms of their cost of sales, working capital requirements as well as their investment and recruitment plans.  

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In the Republic, 40% of SMEs that had planned to expand or invest in have cancelled or postponed these plans, while another 16% are reviewing them. Similarly, two out of five NI SMEs have either postponed or cancelled investment plans while 10% are reviewing them. Bank borrowing, working capital requirements and job creation have all been negatively affected as a result.

Chief economist Oliver Mangan (pictured) commented: “One of the more notable features of the Q2 2019 research is the number of firms that say Brexit is having a negative impact on their business now.”

Sector strategies head Mags Brennan added: “The manufacturing sector, which is fundamental to the Irish economy, registered its lowest sentiment since the first wave of research was carried out in 2017 and, along with the tourism sector, was the most negative sector among ROI SMEs. 

“We encourage businesses to consider the impact that these additional costs could have on their working capital requirements and to discuss with their bank prior to the October 31 deadline to ensure that they are prepared for any eventuality.”

Meanwhile, Bank of Ireland says its Economic Pulse dropped sharply in July, hitting the lowest reading since the start of the index in January 2016. The index, which combines the results of the Consumer and Business Pulses, was down 7.9 on last month and 10.8 lower than a year ago.

The Services and Retail Pulses saw very steep falls, with the Industry Pulse also losing some ground. Firms in all sectors downgraded their near-term expectations for business activity in July.

• AIB and BDO will run a series of Brexit workshops for SMEs, focusing on customs and finance, throughout September and October.