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Accountants losing faith in bounce-back

Tuesday, August 26 11:55:02

Confidence in Ireland's strong bounce-back appears to levelling off, according to an economic survey of finance professionals around the world.

While the second quarter of 2014 saw a marginal upturn in business opportunities, demand weakened and access to growth capital tightened, according to the Global Economic Conditions Survey (GECS), carried out jointly by ACCA (the Association of Chartered Certified Accountants) and IMA (the Institute of Management Accountants).

Although the change in business confidence between Q1 and Q2 2014 is statistically negligible, this apparent stability is the result of dwindling business opportunities and an improving investment environment cancelling each other out, according to the report's findings.

Q2 saw a very marginal fall in business confidence, with 34pc of respondents reporting confidence gains (down from 36pc in the previous quarter) and 22pc reporting a loss of confidence (down from 23pc in the first quarter of 2014).

On a positive note, consumer confidence continues to increase according to the latest KBC Ireland/ESRI Consumer Sentiment Index. Unemployment is also continuing to fall and is currently at 11.5pc down from 13pc from the same month last year.

But while Irish finance professionals remained relatively upbeat about their organisations' prospects, their views about the Irish economy have started to become more pessimistic.

In the second quarter of 2014, 37pc of respondents (an increase from 28pc) in Ireland believed the economy was deteriorating or stagnating, while 61pc (down from 69pc) believed it was on the mend. More than two years of constant improvement in their expectations of public spending also came to an end, and on balance respondents saw a greater risk of government under-spending in the medium term.

"As a result of this more pessimistic macro outlook, business investment and capacity building have fallen, even though they have both been recovering strongly over the past two years," said Liz Hughes, Head of ACCA Ireland.

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