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Brexit and wage increase lead to drop in confidence for Ireland's small businesses

The Small Firms Association is calling for a national Small Business Strategy to improve small business performance.

CONFIDENCE AMONG IRELAND’S small businesses has dropped significantly, according to a new survey published today.

The Small Firms Association (SFA) has revealed that only 45% its members feel that the business environment is improving compared with 59% in November 2018.

In a first for the SFA survey, the large drop in sentiment comes as a result of Brexit uncertainty, increasing tax and wage inflation.

SFA Director Sven Spollen-Behrens told TheJournal.ie that today’s survey – to which 250 small business responded – highlights the need for Ireland’s government to conduct an assessment of Ireland’s small businesses sector.

“There is no clear playbook when it comes to Ireland’s small business sector,” he said. 

Although half of those who took part in the survey said they planned to recruit employees over the coming year, capacity constraints in the labour market could challenge their plans to do that, according to Spollen-Behrens. 

“In order to fill vacancies and retain employees, where the performance of the business and the individual allows, survey respondents expect wage rates to increase over the coming months.”

According to the survey, domestic economic growth and new products provide the biggest opportunity for Ireland’s small businesses. 

Economic stagnation at home here in Ireland as well as ongoing uncertainty around Brexit are identified as the biggest risks to the country’s small business community. 

As Tory leadership candidates Boris Johnson and Jeremy Hunt battle it out to be the next British Prime Minister, Taoiseach Leo Varadkar has said there is “enormous hostility” towards the UK from EU members over the prospect of any future extensions to Brexit. 

The EU has repeatedly said the withdrawal agreement will not be reopened with Johnson saying Britain would leave the EU “do or die” by 31 October. 

The SFA is now calling for a national Small Business Strategy to improve small business performance in Ireland. 

In the long-run, Spollen-Behrens has said that “wage increases will only be sustainable if we manage to reduce business costs or improve productivity among small business.

“Therefore, we need to boost confidence amongst our small business owners and make it easier for them to compete.”

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