SMEs remain resilient however energy remains biggest concern for almost half of businesses
InterTradeIreland’s latest All-island Business monitor reveals that 49 per cent of SMEs rate energy costs as their biggest business challenge in Q2 2026 with over a third absorbing costs into their profit margin.
The quarterly sentiment survey, the biggest of its type across the island, asked businesses for the first time what actions they were taking to address rising energy costs. The results show that 36 per cent are absorbing costs into their business, with 29 per cent passing the price rise onto customers, while 33 per cent are taking none of the above actions.
Other actions SMEs are taking include 18 per cent investing in energy efficiency, 7 per cent actively trying to reduce energy use by changing products, services or operating practices, and 4 per cent are investing in renewables and energy storage.
Despite challenging external market conditions, most businesses report they are stable in the second quarter (60 per cent), with 35 per cent reporting growth. Six out of ten say they remain profitable.
The All-Island Business Monitor shows that SMEs remain resilient, with most firms profitable and stable.
However, looking beyond quarter-to-quarter fluctuations, the four-quarter analysis indicates momentum slowing, with growth, sales, profitability and hiring intentions having edged downward over the past year. Stability remains the order of the day.
Anne-Marie Murphy, Assistant Director of Strategy, InterTradeIreland
The All-Island Business Monitor has a time series which means it can identify long-term trends and shifts. Back in 2019, before the recent series of economic shocks, only one in ten businesses reported they were unsure of their profit margin. Over the last six years, profit margin uncertainty has increased substantially. In Q2 2026 nearly half (47 per cent) of respondents are unsure of their profit margin. These findings suggest that firms who are now grappling with persistent cost pressures and geopolitical uncertainty rather than financial distress, are finding it much harder to pin down their profit margins.
Anne-Marie Murphy points out
Profit margin visibility is not being helped by the uncertainty and volatility many businesses are having to deal with. Firms are operating in an environment where key costs such as labour, energy, and overheads have been on the rise. Although 61 per cent of firms are profitable, just 8 per cent say they are very profitable, while over a third are absorbing rising energy costs rather than passing them on to customers.
When asked about future barriers and opportunities, just over half of firms surveyed (52 per cent) are already taking action to address these. Businesses are focusing on building financial resilience and investing in staff to retain key employees and skills.
Anne-Marie concludes
Businesses that want to build resilience, grow and strengthen their capabilities should get in touch with us. Through InterTradeIreland's Business Explorer and Innovation Boost programmes, firms can access practical support from experts across the island to identify cost-saving opportunities, improve energy efficiency and harness innovation to strengthen performance and future growth.
It’s also worth noting that cross-border trade is now worth a record €17 billion (£14.6 billion), with significant potential for SMEs. Strengthening economic and innovation links across the island gives our indigenous SMEs a platform to build scale and compete internationally.
