The hospitality sector is showing signs of stability but are experiencing reduced investment due to external pressures, including Brexit and rising energy costs linked to the Ukraine conflict.
A report by the Economic and Social Research Institute (ESRI), which was co-authored by the Department of Finance, shows investment by Irish small- and medium-sized enterprises (SMEs) remains below pre-pandemic levels, with 60pc of firms investing in capital assets in 2023 compared to 64pc in 2019.
Investment levels per firm increased nominally from €40,000 to €50,000 from 2021 to 2023; however, real terms remain below 2019 figures.
A decrease in climate-related investments poses challenges for long-term productivity and decarbonisation efforts, with fewer firms viewing carbon investments as critical.
While the proportion of firms willing to borrow increased slightly to 47pc, overall risk aversion appears to be rising, leading to lower expansion aspirations among SMEs.
Report author Conor O’Toole shared, “Investment in SME sectors has recovered compared to pandemic lows. However, in real terms, the levels have not reached pre-pandemic peaks. This is concerning given the importance of investment for long-term growth While this hesitancy is understandable, it does come with a long-term economic cost as investment is a clear channel through which long-term productivity can be boosted. However, that is still a substantial increase from the 2021 survey, where only 2.3pc of respondents cited high borrowing costs.”
