SMEs stall investment plans over Brexit fears

More than a fifth (22pc) of small and medium-sized Irish firms have stalled investment plans because of Brexit.

A new survey published this morning by AIB also shows that another 20pc of firms are getting cold feet and reviewing investment plans.

The AIB Brexit Sentiment Index for the third quarter of this year shows that 63pc of SMEs in Ireland now believe the UK’s departure next year from the European Union will have a negative impact on their business. That compares to 58pc in the second quarter.

The latest survey has found that SMEs here are slightly more negative overall about Brexit than they were three months ago.

Those businesses involved in manufacturing, retail and tourism are most pessimistic.

“The slight weakening of the index reading… in Q3 is probably reflective of the renewed downward pressure on sterling in the quarter, with the euro rising to 91p at one stage,” said AIB chief economist Oliver Mangan.

Catherine Moroney, the head of business banking at AIB, said that just 4pc of SMEs are increasing their investment.

“We are seeing evidence of this among our customer base, particularly manufacturers and exporters investing in efficiencies,” she said.

She said businesses that have postponed bank borrowing are concentrated in the retail and transport sectors.

“Few businesses appreciate the impact that Brexit will have on working capital requirements in the medium term,” she added.

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