In keeping with current concerns regarding labour supply shortages, inflation and Brexit bureaucracy, almost two-thirds (63%) of Irish businesses surveyed expect to increase selling prices over the coming 12 months, a report from Grant Thornton Ireland has found.
Irish businesses are looking to reduce their dependency on the UK market amid continued fallout from Brexit, according to the Grant Thornton Ireland’s International Business Report. The survey of 62 mid-size Irish businesses highlights the ongoing concerns for any further Brexit-related checks or red-tape measures that may come into effect in 2022; with over a quarter (27%) of Irish businesses reducing their exports to the UK, and a further 21% reducing their reliance on UK suppliers.
As Irish businesses look towards alternative markets for growth, some 37% of businesses surveyed expect to grow exports over the coming 12 months. Some 35% of businesses expect to increase revenue from non-domestic markets, and 23% expect to increase the number of countries they sell to.
With 27% of Irish businesses reducing their exports to the UK, Ireland is looking towards the United States, where it has identified the greatest market opportunity for the coming 12 months, highlighting a shift in priority from H1 2021, where Irish businesses identified the UK as having the greatest market opportunity.
Despite the additional challenges posed by Brexit, Irish businesses identified the UK as the main territory for revenue growth over the coming year, indicating that despite the red tape and additional paperwork associated with Brexit, the UK will still remain a key market for Irish businesses.
The results of the IBR indicate that while many businesses are still growing accustomed to the realities of Brexit, a fifth of Irish businesses have already prepared for additional checks and bureaucracy. Some 19% of Irish businesses have employed additional staff to manage the paperwork associated with doing business with the UK and 8% have opened a ‘satellite’ office in a UK jurisdiction.
Commenting on the results of the International Business Report Jarlath O’Keefe, Head of Indirect taxes at Grant Thornton Ireland, said: ‘While the results of the International Business Report H2 2021 reflect a consistent trend of concern for Irish businesses five years after the British referendum to leave the EU, many Irish businesses have employed additional resources to deal with the realities of Brexit.
‘Irish businesses are looking to explore alternative markets within the EU, United States and China as they look to decrease dependency on the UK market.
While it is a challenging time for Irish businesses amid rising inflation, labour market shortages and Brexit bureaucracy, it is promising to see that 85% of businesses are optimistic for the coming 12 months and are channeling resources into exploring alternative non-domestic markets for business growth.”
Although Irish businesses have raised concerns for sales, they are more broadly optimistic for the coming 12 months, as the International Business Report revealed 85% of Irish businesses are optimistic for the coming year, the highest in any of the 29 economies surveyed for the report in the second half of 2021.