Business confidence among SME owners in Ireland dropped virtually across the board after the Brexit vote, according to ISME’s second-quarter business trends survey, which was published today.

ISME recorded a drop in sentiment in 10 of the 12 economic indicators that it tracks. The business lobby group is now calling for the establishment of a “dedicated unit” to coordinate all national efforts post Brexit.

Q2 sentiment among SME owners has now wiped out the gains recorded last year, according to ISME, with the Brexit fallout replacing economic uncertainty as the biggest concern.

The indicators for business confidence, profitability and current employment in ISME’s Q2 survey dropped to single-digit figures for the first time since spring 2013. Some 60% of respondents expected that Brexit would have a negative effect on their bottom line, with 32% stating ‘no change’.

The only indicators to improve in the Q2 survey were current sales (up to 36% from 28% in Q1 2016) and positivity concerning the business environment, which gained one percentage point, at 35%.

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Export expectations slumped from 40% to 15% in Q2, while business expectations also fell heavily, from 49% expressing optimism in Q1 to 14% in Q2.

Negative Indicators 

Commenting on the results, Mark Fielding (pictured), ISME CEO, said: “It is not surprising that the indicators are negative, based on a survey in the first week after the Brexit vote, with business expectations dropping by 35 points (minus 48 since Q4 2015).

“The initial post Brexit shock, with the sterling drop in value, have combined with the ongoing increasing business costs, continuing difficulties in accessing bank finance and late payments to reduce SME business confidence.”

Fielding added that Brexit had significantly increased economic uncertainty and would dominate the economic and social agenda for years. “The task now for our government is to ensure that Irish interests are protected and in particular the SME sector, which accounts for over 70% of the private sector employment,” he said.

“We must also ensure that the country protects and improves its competitiveness. This will involve keeping all our business costs under control, including labour costs. It should also involve a major overhaul of our business and personal tax regime, to ensure that aggressive external competition is handled successfully.”

The ISME survey was conducted in the first week of July, with 945 SME respondents. Some 54% of them employ less than 10, while a further 36% employ between 11 and 50 and the remaining 10% employ between 51 and 250. Geographically, 34% are from Dublin, with 66% spread across the country.

Separately, in a SurveyMonkey poll of 238 customers by Goldfish, a business-to-business cloud telecoms company based in Greystones, six out of ten respondents said they expect Brexit would have a negative effect on their business. Two fifths of the respondents expressed the view that their business could benefit or that it will have no effect.

On the prospects for Ireland’s economy post-Brexit, two-thirds expressed a negative view while one-third  thought the Irish economy would be better off.