Irish businesses are optimistic about the economic outlook for the first time in two years, according to a quarterly survey.
The business sentiment survey, published today KBC Bank and Chartered Accountants Ireland (CAI), signals that, while business conditions are still challenging, there have been signs of improvement in 2009.
The survey shows that business conditions continued to weaken in the third quarter of 2009, but the pace of decline was much slower than in the past four quarters.
The survey is based on 350 responses from chartered accountants working in senior positions (CEO’s, MD’s and FD’s) in what are termed"Ireland’s leading companies."
The outlook of an employee in the likes of Intel would likely differ from a counterpart dealing with the impact of a weak British currency.
More companies reported weaker rather than stronger conditions in the past three months and significantly more firms reported a reduction rather than an increase in employment levels in the most recent quarter. About five times as many firms reported lower employment as reported increased employment. However, the pace of job loss appears to be easing as the ratio of firms reporting job losses to job gains in the previous two surveys had been close to 9 to 1.
27% of respondents said they were unsure whether the State "bad bank" NAMA is the right approach. However, the majority of those surveyed indicated that the Government is right to opt for NAMA. As many as 35% of those surveyed felt NAMA would make no difference on bank lending while, a further 2% felt lending might be reduced. However, a significant majority (62%) of responses felt that NAMA would have a positive effect on lending. The vast bulk of respondents expect a relatively modest boost to lending from NAMA. However, in view of relatively limited demand and the broader expectation that credit cycles in Ireland and elsewhere will be restrained in coming years, this is not a surprising result.
The survey also found that most Irish businesses do not expect the Minister for Finance, to fully implement the recommendations of either the public spending review body, An Bord Snip or the Commission on Taxation, in the upcoming budget.
