Irish business sentiment improved over the summer months, according to the latest index from KBC Bank and Chartered Accountants Ireland.

It was the strongest reading since the final quarter of 2015 when neither Brexit nor President Donald Trump looked like realistic prospects.

Austin Hughes, Chief Economist with KBC Bank Ireland, said fears in the wake of Brexit and fears related to what might come out of the new US administration hadn't come to pass.

"The survey tells us that activity levels are better and the recovery has spread to more companies and sectors and domestic demand has improved. That's a very important element in terms of the overall economy."

"Around the recession, half of companies were saying things had got worse. That's now down to 8% of companies. That's more indicative of a healthy economy," he said.

He said the 8% of companies with a disimproved outlook were not entirely Brexit-exposed enterprises.

"It's broader than that. You have a normal churn of companies who are being beaten by better competitors. Some in the consumer area, some in food, and some in manufacturing are reporting difficulties. Brexit is an element but some is the normal change in business circumstances."

In fact, Austin Hughes said the aspects of the survey in relation to Brexit were among the most encouraging elements.

"What we see here is that 80% of companies have a sense of what Brexit means for them and half of those are acting on it. Some are looking for other suppliers, some are trying to strengthen their footprint in the UK.

"These companies don't look to others to do the work for them. They're asking what does it mean for us and in that regard, it's very encouraging. Rather than waiting to see what happens in two years time, they're acting now," he explained.

Mr Hughes said there was no sense from the survey that businesses believed the economy was in danger of overheating.

"There's no sense that we're back to the early 2000s and the boom and companies responding to capacity pressures by putting up prices. 70% say things are normal. Around 6% say it's above normal, 6% say things are expanding rapidly. There are some sector specific issues, such as construction, but that's a different thing to overheating at at a macro-level," he concluded.