Dickie Best and Barbara McNarry of the George Best Foundation with Cormac McCarthy, Chief Executive of Ulster Bank at the launch of a limited edition commemorative five-pound bank note in October 2006.

The most recent all-island Ulster Bank Business Confidence Survey has found that confidence among small to medium sized businesses remains high, with over three quarters of companies in the Republic of Ireland (RoI) and Northern Ireland (NI) expecting their own performance in 2008 to be the same or better than in 2007. Expectations for growth still remain but plans to invest in staff, new premises and new markets have been scaled back since the first survey in April 2007.

The survey, commissioned by Ulster Bank and carried out by Amárach Consulting in December 2007, is the only one in Ireland to track business sentiment at a regional and all-island level. Results are based on the responses from over 900 businesses.

Concern over market conditions

The survey found that whilst a majority of businesses (83% RoI; 79% NI) believe their own performance will remain strong, they are more cautious about the environment in which they operate than the survey showed in April 2007. Over one third (34%) believe the market conditions are worse now than 12 months ago, an increase of 10% since April 2007. In Northern Ireland, the number of companies who believe market conditions are worse has risen from 22% to 32%.

Cautious Growth Planned

This more cautious attitude to the market environment has not impacted on growth plans, with over 70% of small and medium companies planning to grow their businesses in 2008 and beyond. However plans to hire, expand or move to new premises have been scaled back and funding for this growth is expected to be mainly from internal sources.

Across the island, the majority of businesses expect their growth to be fuelled by increased turnover within the existing product and market mix. The survey highlighted that 34% of growth focussed businesses in the south are planning to grow by introducing new products and services compared with 24% in NI. One in five respondents across the island plan on entering new markets over the coming year.

Key Findings

When asked about now in comparison to 12 months ago:

• A majority of businesses in NI (57%) and RoI (60%) believes market conditions are the same or better than they were 12 months ago. However they are less positive regarding market conditions than they were in April 2007 (April: NI 68%, RoI 73%)

• A majority of businesses employ the same number of staff as they did 12 months ago, with 1 in 5 employing more.

When asked about the year ahead:

• Over three quarters of companies in RoI (83%) expect their performance to be the same or better. Only 13% expect it to be worse.

• More businesses expect an improved performance in 2008 in NI (62%) than in RoI (46%).

• 13% of companies expect performance to be worse, of those almost half cited the economy as their main concern. This is a change from the first wave of the survey when the main concern was competition, with only one-fifth raising the economy as an issue.

• 
  Of the businesses planning growth, there has been a change in how this will be achieved, with companies scaling back their intentions to hire (from 54% in April to 37% in RoI; from 58% to 31% in NI) and any plans to expand or move to new premises (down from 34% to 27% in RoI; down from 43% to 19% in NI).

Regional Variations

Businesses in Dublin and the Mid-East (Kildare, Meath, Wicklow) emerged with the most positive outlook for the year ahead and also were the most upbeat regarding their current performance when compared to last year. Companies in the Border (Cavan, Donegal, Leitrim, Louth, Monaghan and Sligo) and Midlands (Laois, Longford, Offaly, Westmeath) regions were the least optimistic, with 60% in the Border and 56% in the Midlands believing their performance levels will remain the same or worsen in 2008.

Robert Gallagher, Chief Executive, Ulster Bank Corporate Markets says the results indicate that the majority of companies are still confident but they feel there has been a decline in the wider business environment. “Any increased concern about the market in which businesses operate does not extend to individual companies’ expected performance for the year ahead, with growth anticipated and plans in place to hire more staff, albeit at a lower level than six months ago.”
Summing up, he added, “Business sentiment continues to be positive both at a national and regional level but expectations of growth, expansion and moves into new markets have been tempered from earlier in 2007. This demonstrates a resilience and confidence among Irish entrepreneurs in the face of market adversity. The most encouraging finding is that businesses intend to grow in 2008.”

The second Ulster Bank Business Confidence survey was conducted in December 2007, following on from the first wave in April 2007. A total of 900 telephone interviews were conducted with business owners or business managers of companies with up to 100 employees. Regional quotas were imposed in order to ensure sufficient sample within all 9 regions.

The survey was conducted by independent researcher Amárach Consulting.