Business chiefs favour tax cuts as confidence plunges
Business confidence plummeted in the first three months of 2022 and most company bosses believe the Government should cut taxes to boost incomes and prop up demand.
Just 16pc of Irish business leaders came out of the first quarter of the year feeling optimistic about the economy.
That’s down from 31pc at the end of last year and almost three-quarters in the third quarter of last year, according to the latest quarterly Director Sentiment Monitor.
The report, published by the Institute of Directors, also revealed that 92pc of the directors and business leaders surveyed believe there is a limit to what the government can do to tackle ongoing inflationary pressures, as well as supply chain challenges.
However, almost 60pc of those surveyed believe the Government should now review direct taxation to boost income levels in the face of the rising cost of living.
Half did not think that the Government should use the Covid contingency fund to assist businesses through inflation and supply chain difficulties, although 37pc were in favour.
Ultimately, 41pc of respondents regarded the Government’s performance to be positive, an increase of 5pc from the previous quarter. Despite this, 38pc of business leaders feel the Government’s performance has no impact on consumer confidence.
Half of those surveyed also concluded that the Government’s actions have no effect on their own decision-making.
Commenting on the report, Institute of Directors chief operating officer Thora Mackey 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.”
She added: “Uncertainty is a key factor at play here. It is no surprise, then, that just 16pc of business leaders are ‘more optimistic’ in respect of the economy, a fall of 56pc since the third quarter of last year.”
Ms Mackey said that while businesses did believe that tax cuts would boost the economy, they were also “realistic” about what could be achieved on inflation and concerns over 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,” she said.