Linked Finance SME Confidence Index Q1 2024

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Irish SMEs have demonstrated remarkable resilience in the face of inflation, rising interest rates, and geopolitical events, according to our latest SME Confidence Index for Q1 2024. Despite the headwinds, SMEs continue to show a steady level of optimism, with positive sentiments about profitability and job creation going into the second half of the year.

Key Highlights from the Q1 2024 SME Confidence Index

Profitability and Job Creation

The Linked Finance SME Confidence Index for Q1 2024 stands at 62.95, a slight increase from 62.43 in Q4 2023. This sustained optimism is reflected in improved projections for profitability and job creation:

  • Profitability: 73% of respondents reported profits the same or better than the previous quarter, up from 60% in Q4 2023.
  • Job Creation: There is a notable positive shift in employment growth, with fewer companies expecting to cut jobs and more planning to increase headcount compared to last year.

Business Activity and Market Challenges

While profitability and employment trends are encouraging, current business activity has dipped into negative territory for the first time since the onset of COVID-19. Only 33% of businesses expect higher activity in Q2 2024, down from 35% in 2023 and 38% in 2022.

Micro-Enterprises Struggle

A significant concern is the weaker performance of micro-enterprises (those with 1-3 employees):

  • Only 28% of micro-enterprises expect business activity to increase in the coming quarter, compared to 51% of larger businesses (10+ employees).
  • Profitability is also a concern, with only 26% of micro-SMEs experiencing higher operational profit in 2023, compared to 40% of larger SMEs.
Full Linked Finance SME Confidence Index Breakdown | Linked Finance

Future Planning and Government Support

The overall positive sentiment is evident in company planning for the future:

  • Government Grants: 25% of businesses plan to explore government grants or subsidies in 2024. Of these, 51% are focusing on energy grants, 29% on employment subsidies, and 28% on sustainability and ESG-related grants.

Insights from Niall O’Grady, CEO of Linked Finance

Niall O’Grady, CEO of Linked Finance, emphasised the resilience of Irish SMEs amidst economic challenges. He highlighted the need for continued support and adaptive strategies, particularly for micro-enterprises that face additional costs and pressures:

“The resilience of Irish SMEs amidst economic challenges is commendable. While optimism remains steady and forward projections are positive, the dip in current business activity highlights the need for continued support and adaptive strategies.

From a broader perspective, the majority of Irish SMEs are steady, but there are sectors struggling to recover quickly from the past three years’ turbulence, where the COVID-19 pandemic was followed by inflation and interest rate pressures.”

O’Grady also underscored Linked Finance’s commitment to empowering SMEs with the necessary resources and financial solutions to navigate these uncertain times and thrive.

Research was conducted by Behaviours & Attitudes and reflects business performance in Quarter 1 2024 and projections for Quarter 2 2024. Fieldwork was conducted between April 16 – May 7 with 360 subjects in the sample.

More To Explore

Linked Finance SME Confidence Index Q1 2023

The latest Linked Finance SME Confidence Index, based on research conducted by Behaviours & Attitudes, business optimism was at 64 in Q1 2023 (scored out of 100), up from a level of 60.2 in Q4 2022.