Confidence in the economy has dipped among businesses based in Cork due to a tight labor market and rising operational costs, according to a new survey. The latest Cork Chamber’s Economic Trends report, supported by Permanent TSB, reveals that confidence dropped slightly to 80% for the last three months, down from 84% in the previous quarter. This decline comes ahead of the budget announcement next week.
The report highlights that while personal business confidence remains high, there has been a fluctuation in confidence within the broader Irish economy. Auriol Kelly, business banking manager at Permanent TSB, noted the interesting contrast between personal and broader economic confidence.
The challenges faced by businesses in Cork are not exclusive to the region. A separate report by professional services firm PwC shows that insolvency levels have risen in annual terms due to the wind-up of COVID-related government supports and the increasing cost of doing business in an inflationary environment. Business failures have increased by 33% in the first nine months of this year compared to the same period in 2021, according to the latest Insolvency Barometer.
The arts, entertainment, and recreation sector, as well as the hospitality sector, are among the hardest hit by business failures. The retail sector has seen the most failures, with 116 recorded in the year to date. The report reveals that 352 insolvencies have already occurred this year, a significant increase of 79% compared to 2021 levels. However, it is important to note that the current annual failure rate of 25 companies per 10,000 remains lower than the pre-pandemic level of 36 per 10,000.
Amid these challenges, Ronan Murray, President of Cork Chamber, has called on the government to invest more in further and higher education and research institutes. Murray believes that such investments will help bridge the skills gap and support business growth. He emphasizes that talent and skills availability are crucial for meeting growth opportunities, driving innovation, and achieving success in the region.
Unemployment in Cork is currently at a record low of around 4%. However, the lack of available skills among the remaining talent pool is hindering businesses that seek to improve in areas such as sustainability. Despite these challenges, the survey reveals that businesses in Cork are still optimistic about their finances. Over half of the respondents (52%) plan to increase employee numbers, and 58% express a desire to undertake a sustainability course.
While the majority of respondents remain optimistic, there has been a slight decrease in net profits over the September quarter. Only 38% of respondents reported an increase in net profits, down 5% from the previous three-month period. This decline indicates the ongoing challenges faced by businesses in Cork and the need for targeted support to overcome them.