A new survey from professional services firm Azets Ireland has found that small and medium sized firms are more optimistic about the future of the Irish economy than companies employing over 250 employees.
The Azets Barometer Survey also found that Irish businesses are the second most optimistic in Northern Europe with Irish respondents rating their economic prospects at 6.1 out of 10.
The barometer looked at businesses in Ireland, Denmark, Finland, Norway, Sweden and the UK.
It highlighted the growing levels of optimism among smaller firms in Ireland compared to their larger peers and showed that micro businesses employing nine employees or less increased their score from 3.7 out of 10 at the beginning of 2024 to 5.2 out of 10.
Small firms employing 10 to 49 employees scored 6.5 out of 10.
Azets said the positive sentiment among SMEs may reflect a lower level of concern regarding warehoused tax debt, lower levels of inflation as well as a positive outlook for economic growth.
According to the survey, Irish businesses ranked talent recruitment and retention as well as economic uncertainty (both 6) as the challenges at the forefront of businesses' minds. This was followed by geopolitical uncertainty and competition (both 5.8).
Meanwhile, the barometer also showed that 91% of Irish businesses are planning to invest in cybersecurity measures, while other priorities include recruitment and talent acquisition (89%) digitalisation (88%) and employee retention (87%).
But 57% of micro businesses said they will make no investment in artificial intelligence (AI) over the next 12 months. In comparison, 96% of medium-sized businesses that employ 50-249 people said they will invest in AI in the coming year.
Today's survey also shows that Ireland had the highest succession planning score among the surveyed countries, with an impressive 6.3 out of 10. This contrasts with 5.1 in other Northern European markets.
Azets this indicates that a significant majority of Irish businesses are actively engaged in fairly thorough succession planning and are integrating it into their overall business strategies.
Neil Hughes, CEO of Azets Ireland, said the latest barometer indicates that businesses are generally confident about the future and Ireland’s economic prospects.
"Despite facing higher labour costs, increased costs, higher levels of regulation, and the payment of warehoused tax debt in recent times, it is positive to see the growing levels of optimism among ambitious owner managed businesses," Mr Hughes said.
"As we look ahead to Budget 2025, is important that growth in the mid-market is nurtured and encouraged over the coming months," he stated.
Mr Hughes said it was also clear that Irish businesses are prioritising investments in cyber security and people as they look to protect their data and grow their workforce.
"However, the barometer reveals that smaller Irish firms risk being left behind in the AI race. Now is the time for micro businesses in particular to start accessing the potential of this transformative technology and how best to start adopting it across their organisation," he said.
"Entrepreneurial, owner-managed, and family-owned businesses are the backbone of the Irish economy, employing more than two thirds of all those working in the private sector," he added.
