Small business sentiment slumped in first half of 2019, down 14 points since last November, according to the latest 'Small Business Sentiment Survey' from the Small Firms Association.
The survey found only 45% of SFA members feel that the business environment is improving compared with 59% in November 2018.
The sssociation says such a large slump is a first for the survey.
The survey is based on responses provided by SFA member companies, which have less than 50 employees, across all sectors and in all parts of the country.
Sven Spollen-Behrens, SFA Director, said: "Since the beginning of the year small businesses have faced rolling Brexit uncertainty, increasing tax, wage levels and additional regulatory burden.
"These mounting challenges are weighing heavy on small business owners and making it difficult for them to maintain competitiveness, expand and invest currently," he said.
The SFA director also said that the fundamentals of the Irish economy and forecasts remain strong for the remainder of 2019.
"However, Brexit continues to pose one of the biggest challenges faced by small businesses in years and the SFA will remain focused on preparing members for the opportunities and risks to their businesses," he added.