Irish business sentiment weakened notably in the third quarter of this year as the pace of output growth slowed and companies focused more and more on risks posed by Brexit. 

That is according to the latest KBC Bank/ Chartered Accountants business sentiment survey, published today. 

The findings of the survey are consistent with healthy conditions in the economy, but the focus of Irish companies has shifted from recovery to risk.

Austin Hughes, chief economist at KBC Bank Ireland and author of the report, said that we are seeing slower growth in the economy so some companies are hitting the pause button. 

"It's not a slump but over the last three months, companies have been faced with a range of uncertainties," Mr Hughes said. "There are things like global trade tensions, higher US interest rates and you see those causing problems in US and international stock markets in the last while. Really what is emerging is that the unclear and present danger for Irish firms is Brexit."

Three months ago, the consensus among companies was that there would be a soft Brexit with little changes in economic links. Business people expected a smooth transition "down the road". But now businesses could be facing into a hard Brexit with notable changes in the economic relationship. Mr Hughes also said firms are hearing that it is coming in five months so it's an immediate risk. "But what sort of risk it poses is still very unclear and that's why you are seeing firms hit the pause button."

The economist said the survey showed that there is still seeing growth in output and hiring, and the economy is doing well. "But companies are saying, do I have to do this now, maybe I'd be better off just holding back for another three months and that's the real problem in this sentiment survey."

Mr Hughes said it is probably a good thing that firms in Ireland are being more cautious in general because of the pace of growth over the last while, which he believes was probably moving towards unsustainable rates. "You do see in areas like construction where perhaps capacity constraints are also starting to bite," he stated.

The sentiment is reflected in the UK among the firms, with the latest CBI Monthly Trends Enquiry showing a very similar trajectory. "Companies just don't know what to expect, so they are slowing down," he said.

"It's very important to say that this is not a collapse, businesses are not giving up the ghost in any sense at all but they are altogether more concerned because this is something that they can't handle without a little guidance as to where and what might be happening in Brexit," Mr Hughes added.

MORNING BRIEFS - Bank of Ireland continues to trade in line with expectations, according to its third quarter update. New lending in the first nine months of the year was 15% higher than the same period last year. The bank also reported a 24% increase in new mortgage lending in Ireland as its market share rose to 28%. The group is re-entering the Irish mortgage broker market next month. 

*** Debenhams in the UK has reported an annual loss of £492m - the biggest loss in its history. It has confirmed it plans to close up to 50 stores which could result in 4,000 job cuts.

*** Sports Direct International has taken control of the House of Fraser store in Dundrum Shopping Centre in Dublin.