Over half (57%) of Ireland’s finance leaders are favourable about the overall prospects for the Irish economy in the year ahead, down from 81% in 2016 and compares to a low of 11% in 2012.
These are some of the key findings of PwC’s 2018 Chief Finance Officers’ Survey. The survey was carried out in Autumn 2018 with nearly 50 key Irish finance leaders participating in all key industry sectors.
While the majority anticipate revenue increases in the year ahead, it is not translating into bottom line growth as cost pressures escalate. Nearly three-quarters (71%) anticipate growth in revenues in the year ahead, slightly down from 2016 (76%) but much improved on 2012 (59%). Nearly half (44%) anticipate growth in profits in the year ahead and is substantially down from prior years (2016: 67%; 2012: 55%); 43% anticipate growth in headcount in the year ahead (2016: 48%; 2012: 35%).
Remaining competitive is clearly a challenge for Ireland’s finance leaders with 72% anticipating cost increases in the year ahead (2016: 65%; 2012: 36%). Forty four percent are of the view that US tax reform will result in reduced opportunity for investment in Ireland.
Surprisingly, 68% reported to either not being prepared or not having made extensive plans for the consequences of Brexit. Over a third (38%) said that their organisation’s level of trade with the UK would decline as a result of Brexit. Top Brexit concerns according to the finance leaders are uncertainty for business/investment decisions (24%); additional compliance (21%); tariffs/import VAT (16%) and additional costs/competitiveness (13%).
However, there is a silver lining and Brexit opportunities were noted to include stronger relationships with like minded member states (19%); diversification – new markets/products (19%); increased FDI and jobs into Ireland and a greater focus on improved cost competitiveness (13%). The end of March 2019 is fast approaching and there is a risk that the worst case scenario will happen leaving the UK trading under WTO rules.
While the political uncertainty is likely to continue, PwC say business leaders need to focus on running their businesses in an ongoing disruptive environment. Having contingency plans while remaining flexible and agile are key at this time. Doing nothing is not an option warned PwC.
Commenting on the survey, Partner for Performance Improvement at PwC Ireland, Amy Ball said, “As we go forward, Ireland’s finance leaders are more cautious about the future performance of Ireland’s economy as well as about some of their key business metrics such as profits and costs. It is likely that Brexit is also adding to the uncertainty for many.”
She added, “With more restructuring on the cards, finance leaders are challenged to sustain growth with many actively looking at ways to build business models that are fit for the future. Going forward, technology and automation will be key to the survival of the fittest. And getting this investment right first time will be critical.”