Businesses hold steady, but cost inflation and tighter margins test resilience
The Q2 2025 All Island Business Monitor shows that SME sentiment across the island is holding steady, with modest growth in evidence, but rising costs and tighter margins mean resilience is being tested.
The headline figures show that two in five (39%) businesses reported growth, the highest in over two years, and more than half remain stable. Contraction is rare, with only 7% in decline. Growth is broad-based but modest, with stability and slight increases dominating rather than rapid expansion.
Martin Robinson, InterTradeIreland’s Director of Strategy explains " This is the biggest survey of its type. We speak to 750 different SMEs every quarter, and the latest findings point to a business base that is steady. Growth is modest and broad-based rather than high. At the same time, profitability pressures are emerging, which is unsurprising, given the persistent cost challenges businesses are facing.
Martin Robinson, Director of Strategy, InterTradeIreland
The good news is that the vast majority of firms remain in profit, however InterTradeIreland’s longitudinal data shows the share reporting higher margins has eased compared with 2024, with some now operating closer to break even.
Costs remain the most significant headwind, cited by six in ten businesses. Over a third report increases of more than 10% over the past two years in areas such as wages, energy and insurance. In response, nearly half of businesses report they have raised prices in the last six months, and three in ten expect to do so again.
Meanwhile, a quarter of businesses are tackling the challenge of rising overheads by taking action relating to energy and operational efficiencies to cut costs. This highlights an opportunity for more businesses to explore available supports to help boost competitiveness.
Enterprise Minister Peter Burke said: “Small and medium-sized enterprises are the backbone of our economy, and I am committed to supporting their growth and resilience. To that end, my Department recently established the Cost of Business Advisory Forum to examine and reduce the cost of doing business. A range of supports—including those provided by InterTradeIreland - are available to help your business become more efficient and competitive. In addition, the Government has launched a new Market Diversification Action Plan to assist businesses in adapting to an evolving trade environment.
Peter Burke, Enterprise Minister
On that point, according to the All-Island Business Monitor, a fifth of businesses reported global politics and trade uncertainty as an issue in Q2. This has reduced from close to a third last quarter, in the immediate aftermath of the US tariff announcements.
One in 10 businesses across the island feel exposed to the impact of US tariffs. Overall, 13% of businesses said they would value support or guidance in relation to evaluating or managing trade-related risks.
This latest Business Monitor once again highlights the resilience of our business community in what is still an uncertain trading environment. The challenges are real, and I don’t underestimate them – but I am determined to ensure our businesses have the support they need to thrive. My tariffs working group also continues to meet regularly to deal with ongoing trade issues. InterTradeIreland’s Trade Hub is also a valuable resource for companies eager to grow across the island. We will continue to back our businesses and help build a thriving, regionally balanced economy known for its enterprising spirit.
Dr Caoimhe Archibald, Economy Minister
Resilience and modest growth define the moment, but persistent costs and tighter margins are weighing on firms. In this context, cross-border trade can play a vital role in strengthening business resilience. If you would like guidance on how InterTradeIreland can help your business to benefit, get in touch with us.
Martin Robinson, Director of Strategy, InterTradeIreland
To sign up for InterTradeIreland’s research and a full report on the latest findings of the All-Island Business Monitor, visit the All-Island Business Monitor page.
