In the latest quarterly Director Sentiment Monitor (DSM) research report, published today by the Institute of Directors (IoD) in Ireland and covering the first quarter of the 2022, just 16% of business leaders are ‘more optimistic’ in respect of the economy, compared to 31% in Q4 2021 and 72% in Q3 2021.
In addition, almost 60% of business leaders believe the Government should review direct taxation to boost disposable income levels in the face of surging inflation. Furthermore, when asked if the Government should use the COVID contingency fund to assist businesses in dealing with inflation and supply chain issues, 50% of our respondents said ‘no’, while 37% said ‘yes’.
Commenting on the findings, Thora Mackey CDir, Chief Operating Officer of the Institute of Directors (IoD) in Ireland, said:
"Business leaders are facing turbulent times, as business confidence plummeted in the first quarter of the year, no doubt impacted in large measure by the invasion of Ukraine by Russia and the many consequences of that war. The humanitarian impact has been immense, of course, but energy costs and resources, and supply chain issues, have been significant, as has wider geopolitical and economic instability. Uncertainty is a key factor at play here. It is no surprise, then, that just 16% of business leaders are ‘more optimistic’ in respect of the economy, a fall of 56% since the third quarter of last year.”
Thora Mackey added:
"While a majority of business leaders feel the Government might look at initiatives on direct taxation to add impetus to the economy, they are also realistic in that an overwhelming majority of 92% believes there is a limit to measures the Government can take in relation to inflation and supply chain issues given that Ireland is a small open economy. Business leaders will need to maintain a steady hand in navigating their businesses through this unsettled time.”
The IoD’s latest DSM research report reveals some positives for the Government with respect to consumer confidence. In Q4 2021, 36% of business leaders believed the effect of the Government’s performance to be positive. That has increased to 41% in Q1 2022. With respect to directors’ decision-making, in Q4 2021, 32% of business leaders believed the effect of the Government’s performance to be positive, and that has increased by 6% to 38% in Q1 2022. Worth highlighting, too, are the findings related to those who say the Government's performance has had no effect on consumer confidence (27% in Q4 2021 but 38% in Q1 2022) and on their business decision-making (51% in Q4 2021 and 50% in Q1 2022).
The key findings of the IoD’s Director Sentiment Monitor for Q1 2022 include:
Business confidence: When asked, ‘In respect of the Irish economy, how do you feel now compared to the previous quarter?’ the business leaders chose as follows:
- More optimistic:16%
- More pessimistic: 54%
- No change: 30%
Direct taxation: When asked, ‘Do you believe the Government should review direct taxation to boost disposable income levels in the face of surging inflation?’ the respondents selected as follows:
- Yes: 59%
- No: 35%
- Don't know: 6%
COVID contingency fund: When asked, ‘Do you believe the Government should use the COVID contingency fund to assist businesses in dealing with inflation and supply chain issues?’ the business leaders chose as follows:
- Yes: 37%
- No: 50%
- Don’t know: 14%
Government measures: When asked, ‘Do you believe there is a limit to measures the Government can take in relation to inflation and supply chain issues given that Ireland is a small open economy?’ the respondents selected as follows:
- Yes: 92%
- No: 7%
- Don't know: 1%
Government’s performance: When asked, ‘What do you believe has been the effect of the current Government’s performance to date on the following?’ the business leaders chose as follows:
Consumer confidence
- Positive: 41%
- Negative: 21%
- No effect: 38%
Your business decision-making
- Positive: 38%
- Negative: 13%
- No effect: 50%