The latest BDO Optimism Index released today shows that a third of companies in Ireland expect Brexit to have a negative impact on their business.
The projected activity levels for the third quarter dropped for the first time in five years.
The overall optimism figure is in line with the previous quarter falling slightly to 66.4 points (from 66.8 points) for the quarter. Projections for third quarter activity fell for the first time since 2011. Some 46% of companies said they expected a higher level of activity in the third quarter, compared to 53% who projected higher levels of activity in the same period of 2015.
That’s the first anticipated quarterly fall since 2011. There was a rise in the number of companies predicting lower activity in the third quarter with 15% anticipating a reduction, compared to 13% in the same period last year.
Some 34% of companies of the 350 businesses said Brexit will have a `somewhat negative’ or `very negative’ impact on their trading with 50% saying it won’t impact them and 9% expecting a boost from the UK’s decision to leave the European Union.
Exporters are most fearful about the prospects of Brexit with 36% of the sector saying it would have a "somewhat or very negative" impact on their prospects.
The index also shows that second quarter employment levels remained broadly stable. Some 77% of companies said they employed the same number of people in the second quarter of 2016 as they did in the same period last year and just 7% said they had fewer people on the payroll, compared to 8% who said that last year.
However, 16% said they had more staff in the period compared to 21% who said that last year.
Managing Partner of BDO, Michael Costello said, "Clearly Brexit has created uncertainty for businesses not only in Ireland and the U.K., but across Europe and indeed globally. This uncertainty is prompting companies to downgrade their forecasts for activity going forward and given the fact that the UK is our largest trading partner, that is not surprising. What is certain is that Brexit will be a drawn-out process and while there will be some risks, there will also be opportunities for growth and preparation is key."