Two in five small and medium-sized enterprises (SMEs) across Ireland and Northern Ireland recorded growth in the second quarter of 2025, the highest level in more than two years, according to the latest All-Island Business Monitor.
The survey of over 750 business managers, conducted for InterTradeIreland, the cross-border economic development agency, found that more than half of SMEs reported stable performance, while contraction was relatively rare, with only 7% of firms saying they had declined.
The report described sentiment as “holding steady, with modest growth in evidence,” but warned that rising costs and tighter margins are testing business resilience. Costs were identified as the biggest headwind, with six in ten companies citing them as a challenge. More than a third said they had faced increases of over 10% in the past two years, particularly in wages, energy, and insurance.
To offset pressures, nearly half of businesses have raised prices in the past six months, and three in ten expect to do so again. A quarter are turning to measures such as energy savings and operational efficiencies to curb expenses.
The survey also revealed that geopolitical factors remain a concern, but their impact has eased. One in five firms highlighted global politics and trade uncertainty in the second quarter, down from a third in the previous quarter, which coincided with US tariff announcements. One in ten said they still feel directly exposed to the effects of tariffs.
InterTradeIreland’s Director of Strategy, Martin Robinson, said the findings suggest resilience but also highlight growing strains on profitability. “The growth reported by SMEs is modest and broad-based rather than high,” he said. “At the same time, profitability pressures are emerging, which is unsurprising given the persistent cost challenges businesses are facing. In this context, cross-border trade can play a vital role in strengthening business resilience.”
Government ministers on both sides of the border acknowledged the findings while pledging further support for SMEs. Ireland’s Minister for Enterprise, Peter Burke, described SMEs as “the backbone of our economy” and said his department had recently set up the Cost of Business Advisory Forum to tackle rising overheads. “A range of supports are available to help businesses become more efficient and competitive,” he added.
Stormont’s Economy Minister, Caoimhe Archibald, praised the “resilience of our business community in what is still an uncertain trading environment.” She said her tariffs working group continues to meet regularly to address trade issues and highlighted InterTradeIreland’s trade hub as a “valuable resource for companies eager to grow across the island.”
The latest figures suggest that while SMEs are showing signs of growth, persistent costs, global uncertainties, and narrow margins remain critical challenges for the sector.
