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Hopeful signs in Irish business morale

Monday, February 25 14:13:49

Business confidence in Ireland fell only marginally in the last quarter of 2012, with 19pc of respondents reporting confidence gains - down from 21pc three months earlier.

However, more businesses reporting no change in confidence (45.5pc, up from 42pc), according to the latest Global Economic Conditions Survey conducted in partnership by ACCA (Association of Chartered Certified Accountants) and the Institute of Management Accountants (IMA).

ACCA Ireland notes that, despite the negative sign, business confidence is almost certainly stabilising in Ireland. ACCA points to evidence of financing difficulties easing for firms, a strengthening labour market, or at least fewer businesses laying off staff, as well as a steady increase in investment.

"When it comes to capital spending, Ireland is the most positive success story of 2012; respondents here reported a full year of increased capital spending despite an aggressive programme of fiscal consolidation," said Liz Hughes, head of ACCA Ireland.

"As a top destination for foreign direct investment in Europe, Ireland is subject to strong spillovers from many other major economies. Good news is coming out of Europe for now, and the bailout here is proving more successful than other similar interventions, but the country is vulnerable in the medium term by developments in the US. US firms invest more in Ireland than in all of emerging Asia or all of the BRICS put together, but may not be able to keep this up. US respondents are telling us that political polarisation and uncertainty are hurting the economy, which is evident when one looks at capital spending and job creation. This slowdown could make its way to Ireland very quickly."

"Going into 2013 there are reasons to be optimistic about the global economy; rising employment levels, an end to the slowdown in China, a less volatile situation in Europe and a temporary resolution to the US fiscal cliff crisis are all positives which should impact the global economy in the year ahead. But overseas investment, on which Ireland's economy will depend it remains to be seen how the global economy will impact on Ireland in future months."

Global business confidence dropped marginally in the fourth quarter of 2012, according to a survey of 1,994 finance professionals around the world. 43pc of global respondents reported decreased levels of business confidence (up from 41pc in Q3), while only 19pc reported improved confidence levels. Meanwhile, 30pc of respondents considered that the global economy was on course for recovery (up from 29pc in Q3), while 65pc (down from 67pc) believed it was stagnating or deteriorating. Business confidence in the rest of Western Europe continued to surprise with a weak but real recovery throughout the last half of 2012; in particular, confidence rose marginally in the UK and Cyprus.