8 hours ago
Geopolitical concerns dampen outlook for medium-sized Irish companies
The level of optimism among Irish medium-sized firms has taken a sharp fall with an 18% contraction in the last three months, the latest Grant Thornton International Business Report (IBR) has found.
The report, which provides insights into the attitudes of 10,000 mid-market businesses across 32 economies, revealed that while 63% of companies surveyed in Ireland are optimistic about the outlook for the economy over the next twelve months, this stands in sharp contrast to findings from the previous three months where 81% of businesses surveyed stated a higher level of confidence.
The research, carried out across April and May, shows that the change in mood has swept through Irish mid-market firms' view of their performance over the next year, with a 25% nosedive in predicted profitability, a 9% decline in expected revenues and a 10% spike in the expectation of reduced demand.
The IBR also found international tariff disputes to be a likely factor in the changing mood of Irish medium-sized enterprises, with almost double the level of concern among these companies that geopolitical disruption would be a key constraint on their business.
This is illustrated in the sharp fall in the portion of Irish mid-market firms expecting an increase in revenue from non-domestic markets over the next 12 months, contracting from 40% at the end of last year to just 16% in the second quarter of 2025.
While the increase in concern about geopolitical disruption is significant, it is still short of the overall level of concern across the Eurozone, which stands at 44%, according to the research.
The global uncertainty is similarly reflected in Grant Thornton's US CFO survey, also out this week, which reports that 46% of US CFOs surveyed are pessimistic about the US economy, with 46% adjusting their supply chains to reduce the impact of tariffs.
The worsening outlook in Ireland has had a knock-on effect across various areas, with a 10% decline in the number of Irish medium-sized firms planning to invest in sustainability initiatives. This is compounding other challenges in the economy, where Irish mid-market firms are already experiencing a range of issues.
For example, almost double the number of firms predict their labour costs will rise over the next twelve months. Similarly, there was an 18% spike in the percentage of companies that saw the availability of skilled workers as a key constraint on their business, the report said.
Commenting on the latest IBR, Grant Thornton Head of Industry, Martin Shanahan, said: 'Medium-sized firms, a key component of the economy, are navigating a period of global uncertainty with resilience and adaptability. While some companies are reassessing their growth forecasts, this reflects a thoughtful and strategic response to evolving global dynamics rather than a lack of ambition.
"Geopolitical shifts and economic pressures are prompting businesses to think more critically about where and how they invest, especially in key areas like sustainability. These challenges, including labour costs and talent shortages, are not new, but Irish mid-market firms have consistently shown their ability to innovate and adapt."
