Economy and confidence

Measured optimism has been an enduring feature of this research since we began assessing leadership attitudes and CEO perspectives at home and abroad over the past decade.

However, the profound changes triggered by technology and shifting geopolitical sands are reshaping CEO attitudes about the future. We asked CEOs about their confidence in three-year growth in both the global and national economies.

In the Republic (ROI), 80 percent of CEOs said they expect global growth over the next three years to improve compared with 73 percent of their NI counterparts. This is up markedly in ROI from 60 percent of respondents last year but effectively static in NI (72 percent in 2023).

Meanwhile worldwide optimism in the global economy is also up from 60 percent confidence in 2023 to 72 percent this year.

Faith in the three-year prospects for the ROI economy was marginally more optimistic this year, up to 90 percent from 87 percent in 2023. North of the border the shift was somewhat more positive, with 93 percent of business leaders in NI stating confidence in the local economy compared with 67 percent last year. 

In Belfast, KPMG’s Johnny Hanna is cautiously optimistic about the local economy. As Partner in Charge of KPMG in Northern Ireland, he says that business leaders have always had an additional level of resilience “to deal with some of the previously unique challenges of doing business in the region.”

In a post Brexit environment, Hanna says that there’s “A measured sense of optimism in the business community.” He cites the foundations of a functioning Executive and high levels of employment. Hanna says, “Such relative stability underpins confidence in both the wider economy and in businesses themselves.”

However, he believes there’s also a sense of unrealised opportunity . “We can and should be attracting more inward investment and home-grown businesses have further potential to scale and grow.”

Hanna also cautions that tough measures flagged by the new Labour government in London “Have the potential to hamper progress in funding for much needed infrastructural development including the widely heralded City Region and Growth Deals which are of significant importance and need certainty to deliver the expected benefits.” 

Exploring attitudes to M&A, our CEO research found that just over a quarter (27 percent) of ROI CEOs see M&A as the most important strategy for achieving their organisation's growth objectives over the next 3 years, marginally ahead of the figure for their global peers at 26 percent.

Meanwhile, for CEOs in NI the appetite for prioritising M&A rises to 37 percent. Of those surveyed, 40 percent in ROI are planning acquisitions compared with 53 percent in NI – somewhat lower than the 95 percent worldwide looking at the same approach.

According to Mark Collins, Head of Deal Advisory with KPMG in Ireland, “A sense that the major economies have passed the top of the interest rate cycle coupled with valuation rebasing in some sectors can provide opportunities to unlock attractive deals. Looking ahead, we anticipate technology, healthcare & pharmaceuticals, and energy & infrastructure are expected to be the most active sectors.”

As a caution, Collins suggests that attention should continue to be paid to the reasons for deal failure, noting that “while macro considerations can and will continue to be a driver of deals not getting over the line, valuation gaps continue to be cited by many participants as the primary reason for deal failure in the Irish market.”

Looking at the funding environment for deals in Ireland, Collins says Irish business benefits from a wide range of financing options. “Irish banks are typically the first port of call for most companies and we continue to close attractive loan deals. The lending environment is somewhat cautious, however, good companies that can express their business plan along with mitigants for business risks such as inflation, availability of employees and market turbulence are getting access to the funding they require.”