Q1 2023 All-Island Business Monitor

Smoother start to Q1 for businesses but cost issues and the skills squeeze persist

Press Release

• Businesses reporting that they are in a stable position hits a four-year high.
• The number of businesses experiencing rapid or moderate growth is three times higher for large firms than for small firms.
• Energy and rising costs still the main concerns, but impact is starting to lessen.
•  Nearly a third of SMEs are having difficulty recruiting the appropriate skills for their business.
• Over half of businesses surveyed have not taken steps to reduce input costs.

Business Position

InterTradeIreland’s latest All-island business monitor reveals the mood music among businesses is pointing to a solid start to Q1 2023, as the number of firms reporting they are on a stable footing hits a four year high, at 55 per cent, while 36 per cent are reporting growth. A third of businesses are optimistic about sales increases in the next 6 months.

The survey reveals a marked gap in growth fortunes depending on firm size.  The number of businesses experiencing rapid or moderate growth is three times higher for large firms than for small firms.

Martin Robinson, InterTradeIreland’s Director of Strategy says:

“This is the biggest survey of its type. We talk to a wide range of businesses across the board to understand what is happening in all corners of the economy.  44 per cent of large firms are growing compared to 14 per cent of businesses at the opposite end of the scale – that is a real contrast.”

Martin continues: ‘’We know that businesses that export enjoy higher rates of growth and profitability, yet only 1 in 5 firms surveyed are selling across the border. The cross-border market is a natural first step particularly for small firms to begin their export journey. I would encourage businesses to take advantage of the wide range of trade information, advice and practical support that InterTradeIreland provides to help grow cross-border exports.’’ 

The  pressures that businesses have been adjusting to over the last number of quarters – rising energy bills and costs, are still the main issues dominating concerns for firms, but their impact appears to be reducing in scale as there is some easing of inflationary pressures and less volatility in the energy markets.

Business Issues

However, the vast majority of businesses are not optimistic about any decline in input costs, with 80 per cent of firms expecting to be hit by further rises in the next twelve months.  Tellingly, when asked about taking steps to cut costs, only half of businesses said they had taken any of the cost reduction measures listed in our survey such as cutting energy costs or negotiating with suppliers.

While cost concerns are still very much to the fore, the need to have the correct talent to grow a business is starting to come into sharper focus.  The challenge of finding talent is significantly affecting 3 in 10 respondents. However, this pressure is particularly acute for the largest firms, with a massive 50 per cent citing difficulty in sourcing the right skills.

Recruitment has been a consistent issue for SMEs but until recently has largely been overshadowed by rising energy and costs. However, a skills squeeze is a headwind that could constrain growth.

Martin adds

‘’While two in three businesses have passed on price increases, this strategy is not sustainable in the long-term. It is concerning that half of firms report that they have not yet tried to put sufficient measures in place to combat costs or resolve skills issues. Firms need to adopt digitalisation and sustainability practices that enable them to reduce costs and their reliance on skills in what is currently a constrained labour market.”

InterTradeIreland works closely with SMEs and our innovation supports enable businesses to develop new products and processes, find ways to reduce costs and recruit new talent into their business. To find out more about how we can help, contact InterTradeIreland.”

This infographic illustrates the findings from the All-Island Business Monitor conducted in Q1 2023.