Thursday, July 24 10:13:50
Confidence among Ireland's business leaders in the future of the economy has almost trebled but the rising cost of doing business and skills shortages in key sectors remain a worry.
That's according to PwC's 2014 CEO Pulse Survey out today, which found that a large majority of Irish CEOs view the increasing tax burden, rising labour costs and the availability of key skills as key threats to this growth.
An overwhelming majority (86pc) of Irish CEOs are positive about the outlook for Ireland's economy, up from 31pc last year. More CEOs are now confident in our economy compared to 2007 and pre-recession times.
Over three-quarters (77pc) are favourable about the future prospects for their own businesses, up from 44pc last year, the survey found.
This positivity is echoed in the anticipated performance of aspects of Irish operations: 77pc expect revenue growth and 69pc expect profit growth, up from 56pc and 53pc respectively on last year.
Almost 9 out of 10 MNC CEOs plan to increase or maintain their investment in Ireland with access to highly skilled people being the most critical factor and over half (58pc) plan to increase the workforce, up from 34pc last year and 36pc in 2008. However, over one in ten (13pc) are still looking at headcount reductions.
According to the survey, much of this growth is fuelled by opportunities in 'existing' markets with nearly two-thirds (60pc) planning expansion in existing domestic or foreign markets. One in ten (10pc) plan to target new geographic markets. Nearly one in five (19pc) are looking to new product or service innovations and 10pc see opportunities through M and As/joint ventures.
Half (49pc) have capital investment plans, up from 43pc last year, it found.
Overall, 58pc of respondents report their businesses to be in better financial health now compared to the period prior to the financial crisis some five years ago. However, nearly a quarter 23pc feel they are in a worse position.
The increasing tax burden is a key challenge for 86pc of CEOs. Other key challenges include rising labour costs (81pc) and the availability of key skills (69pc), and Nearly a third (30pc) say finance is more readily available now compared to a year ago, up from 16pc last year. One in ten reported plans to restructure existing borrowings in the year ahead; a similar proportion (11pc) plan new borrowings while 62pc do not envisage any change to their capital structure.
An overwhelming majority (92pc) of responding MNC CEOs confirmed that their company's investment in Ireland is considered to be a success. Almost 9 out of 10 currently plan to increase or maintain their investment in Ireland. The ability to access highly skilled people is the most critical factor (78pc) for increasing and/or maintaining this investment, according to the survey, up from 31pc last year.
Competitive wage rates (76pc) and improved cost competitiveness (56pc) are also very high on the agenda. The retention of the 12.5pc corporate tax rate is important for over two-thirds (69pc). Having a competitive personal tax regime for foreign employees working in Ireland is twice as important compared to last year.
Two-thirds (66pc) of Ireland's business leaders expect their export volumes to grow in the next 3 - 5 years. However, this represents a drop from 73pc last year. A third (32pc) expect export volumes to grow by more than 10pc. The survey reveals heightened interest in the UK and Western Europe with a third more CEOs targeting these markets compared to last year. There is also greater interest in some emerging markets such as China, Brazil, Japan and Africa.
Speaking at the survey launch, Ronan Murphy, PwC Senior Partner, said: "The survey shows that the pendulum has swung with levels of confidence across many areas of business now higher than 2007 and pre-recessionary times. Substantially more CEOs expect revenue and profit growth and confidence amongst MNC CEOs has also improved. The survey also highlights that the skills challenge persists and competitive wage rates is a key concern for both indigenous and multinational CEOs."