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By Graeme McQueen, 08 March 2017
Concerns amongst businesses about the potential impact of Brexit have eased over the past six months, but currency risk is still undermining competitiveness, according to a survey by Dublin Chamber of Commerce.
The Chamber's Q1 Quarterly Business Trends Survey identified a notable softening of attitudes in terms of how firms believe the exit of the UK from the EU will affect their business.
The survey, carried out in the first two weeks of February, found that 39% of firms expect Brexit to have a negative effect. When the Chamber asked the same question to the same panel of companies in August 2016, 50% of firms were anticipating a negative impact.
The Q1 2017 survey found that 42% expect Brexit to have a neutral effect (versus 35% in August 2016), while 1 in 5 companies (19%) anticipate a positive outcome for their business as a result of Brexit, up from 14% previously.
The Chamber's Q1 Business Trends Survey was carried out amongst 401 companies.
According to Mary Rose Burke, CEO of Dublin Chamber: "The shock of the Brexit referendum result meant it was natural for companies to hunker down and for nervousness to set in. While a great deal of uncertainty remains around how the UK's exit will pan out, it is encouraging to see an increased sense of optimism amongst firms. However, while the general mood has improved, the Chamber's survey highlighted that the depreciation of Sterling remains a major concern for business. One third of respondents (30%) said that the weak pound is negatively impacting on their business' competitiveness. The threat of further currency fluctuations is likely to continue to hang over businesses during the short-to-medium term."
Government Must Do More
While businesses are showing resilience in the face of economic uncertainty, respondents to the Chamber Survey delivered a damning verdict on the role of Government.
Four out of five companies (82%) surveyed said that neither the recent Budget nor the Action Plan for Jobs had improved their resilience in the face of Brexit.
Ms Burke said: "Business owners and managers are working hard to ensure that their businesses are set up to address the challenges and embrace the opportunities of Brexit. For many firms, that means diversification or expansion into new markets. However, businesses need Government to have their backs. Over the coming months, Government must focus on ensuring there is an environment in which Irish firms can compete effectively with their counterparts abroad. Not least, this must include a progressive mid-term review of the Capital Plan and an ambitious pro-business Budget in October."
Ms Burke added: "In particular, there is grave concern about an impending infrastructure crisis. This can only be averted through a major increase in capital investment. Government must not repeat the past mistake of failing to plan ahead. We are currently experiencing an urgent need for new infrastructure across the board. The lack of housing is well-known, while the shortage of hotel rooms threatens to stunt the impressive growth being seen in tourist numbers. On the transport front, congestion is becoming a bigger and bigger issue for companies and workers by the week. The upcoming mid-term review of the Capital plan must address this, with projects like Metro North and Dart Underground accelerated to ensure that Ireland can cope with growth.”