SME insights, economic predictions and the Trump factor

Expert commentary from Jim Power, Economist 

On 11th March 2025, our webinar provided insights into Ireland's economic landscape, focusing on the role of SMEs.

Hosted by Aoife McGinley, the event featured economist Jim Power and Mark O’Rourke, MD of Bibby Financial Services. They explored the challenges and opportunities for Irish businesses amid geopolitical uncertainty and policy shifts.

Jim emphasised the need for a dedicated body to represent SMEs, noting the lack of proper government analysis on new regulations and the tight margins many SMEs face.

Irish Economic Outlook and Geopolitical Factors Shaping the SME Sector

1. Interest Rate Outlook & US Impact: The Eurozone is likely to experience interest rate cuts, which could be positive for SMEs seeking investment. However, uncertainty surrounding potential US policy changes especially under a returning Trump administration adds significant volatility. US fiscal stimulus and tariff policies could also increase inflation, potentially offsetting the positive effects of rate cuts.

2. Trump & Investment Impact: The return of Donald Trump and his trade policies creates significant uncertainty, which may reduce investment and increase economic volatility. This has led many business owners to adopt a more cautious approach, delaying investments in the face of unpredictable market condition.

3. FDI vs. SMEs: There is growing emphasis on moving away from over-reliance on Foreign Direct Investment (FDI) and focusing more on supporting the SME sector, which is vital for Irish businesses and employment, highlighting the urgency for a dedicated body to represent the interests of SMEs.

4. Ireland & UK Relationship: Geopolitical shifts, particularly in response to US trade policies, offer the potential to strengthen the Ireland-UK relationship. This could open up new growth opportunities for SMEs, especially those involved in cross-border trade.

SME Growth in a High-Cost Environment

Stay agile and adapt to change: SMEs that succeed in tough times are flexible and responsive, regularly updating business plans, diversifying supply chains, and adapting quickly.

• Build strong supplier relationships
• Use technology for flexibility and remote work
• Keep cash reserve

Take control of your costs: SMEs can boost revenue and efficiency by cutting non-essential costs, optimizing operations, and ensuring investments deliver value. Analysing expenses and making strategic technology investments can drive sustainable growth.

• Automate processes and prioritize customer retention- proven to be more cost-effective than acquiring new customers
• Assess the impact of costs directly affecting your bottom line - adjust pricing strategies
• Regular audits help uncover savings, improve operational efficiency and consider reallocating resources

2025 Predictions

• Yes, SMEs are feeling the pressure to navigate economic uncertainty, but its doable by balancing investment opportunities with financial caution, ensuring sustainable growth without compromising critical functions. Managing cash flow effectively is also key to maintaining stability amid shifting economic conditions.
• Rising costs, regulatory pressures, and workforce challenges require a focus on efficiency, adaptability, and strategic decision-making to stay resilient. Flexible financial solutions can provide the support needed to navigate these pressures while maintaining growth.
• With ongoing M&A and MBO activity driven by generational shifts and economic uncertainty, many SMEs are considering ownership transitions as part of their future-proofing strategy. These transactions often require funding support to ensure a smooth transition and long-term stability. 
• Success in a high-cost environment is challenging, but with the right approach, it’s possible. The right financial partner, like Bibby Financial Services can provide the working capital needed to navigate these changes with confidence.