The latest six-monthly SME Business Sentiment Survey from Chartered Accountants Ireland and GRID Finance, released on 26 May, has found that confidence has weakened sharply among SMESeventy-one percent are less optimistic about the economic environment than they were six months ago, up from 54 percent in October 2025.

The survey measures and tracks the experience, confidence and sentiment of SMEs, including small accounting practices, doing business in Ireland. The inaugural survey took place in April 2025 followed by the second survey in October 2025.

The sharp rise in SME pessimism in this, the third survey, is unsurprising given that just one quarter (25%) of companies reported increased profitability, compared to 32 percent in October 2025.

Cost pressures continue to rise, with 84 percent reporting an increase in business costs.

Thirty-eight of SMEs cite staff costs as their biggest financial challenge, while 54 percent say rising costs are the biggest challenge affecting competitiveness.

Recent global events are also weighing heavily on SMEs, with almost half of business owners (48%) ranking geopolitical uncertainty and associated cost and supply chain impacts as the biggest challenge to their business over the next 12 months.

This uncertainty is reflected throughout the survey findings with one-third (33%) of SMEs stating that energy costs and energy security have the greatest impact on their business operations when it comes to infrastructure.

“SMEs are being squeezed from all sides—by rising wages needed to retain staff, persistent increases in day-today operating costs and energy and regulatory pressures. These are no longer temporary headwinds; they are embedded challenges that are eroding margins, weakening competitiveness and driving a much more cautious business outlook”, Cróna Clohisey, Director of Members and Advocacy, Chartered Accountants Ireland, said. “While almost half of SMEs (47%) say that they need energy cost supports—up 19 percentage points in a year—less than one in 10 have applied and half (50%) of SMEs say these supports are not effective. Making these supports more accessible and more effective must now be a priority”.