Optimism among Irish firms but taking action on sustainability a challenge – KPMG
Over half of Irish businesses expect to increase turnover in the next 12 months and 38% expect to expand their workforce, according to the latest research from KPMG.
The Enterprise Barometer reveals overall optimism among Irish businesses, with 59% of firms reporting plans to grow in the near future.
59% intend to finance their expansion primarily through their own balance sheets or internally generated funds.
While the vast majority of survey respondents, 83%, support the need for more action on climate change, two-thirds express concern over the need for more clarity on the costs and benefits of these measures, and three-quarters say no stakeholder groups are exerting pressure on them to develop decarbonisation strategies.
The report said this poses a significant challenge for companies as they strive to make informed decisions on sustainability measures and allocate resources effectively.
Alan Bromell, Head of Private Enterprise at KPMG Ireland, said the survey showed both resilience and measured confidence in the future amongst Irish businesses and entrepreneurs.
“Notwithstanding the challenges in areas such as costs, and interest rates, Irish entrepreneurs are resourceful and robust. Private Irish business and entrepreneurship are critical pillars of the Irish economy, providing employment, sustaining tax revenues, and acting as role models for future entrepreneurs,” he said.
“In addition, their ingenuity and innovation can be instrumental in solving various challenges, from technology, health and nutrition to sustainability and environmental protection,” he stated,
“Our survey also shows that sustainability has become a fundamental aspect of business operations,” he said, “and it’s encouraging to see businesses in Ireland actively pursuing sustainability measures. However, they need help understanding the costs and benefits of decarbonisation,” he added.
Most of the surveyed businesses recognised the significance of digital transformation for their success, with 73% believing digital transformation was crucial to their business.
Over three in five have a well-defined digital strategy transformation in progress, highlighting the proactive steps businesses are taking to remain competitive and future-proof their operations.
When asked for their views on the current tax regime, 24% believe it encourages entrepreneurship and growth, while three-quarters feel that the Irish tax regime is more challenging for domestic businesses.
Over half (57%) expressed concerns about the administrative burden attached to the Irish tax regime, particularly for smaller businesses and entrepreneurs, and an overwhelming majority (74%) believed that increasing the rate of employers’ PRSI would significantly impact their businesses.
The top three tax measures businesses would like to see in Budget 2024 are introducing tax measures to encourage sustainable behaviour (83%), amending Capital Gains Tax rates or rules to encourage investment in Irish companies (79%) and introducing a reduced tax rate for dividends for entrepreneurs (74%).
The report said these highlight a desire for tax incentives and reforms that stimulate investment, reward entrepreneurship, and promote sustainable business practices.
Recruiting challenges remain, with 60% of private businesses and entrepreneurs facing difficulties in this area. Nearly half (45%) consider the current tax regime in Ireland a disadvantage to recruiting and retaining skilled employees.
The availability of residential accommodation is another major concern; over three-quarters (77%) say lack of availability of accommodation is an issue, suggesting that the housing situation in Ireland could impact recruitment and competitiveness.