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Weakness in SME investment ‘concerning’ – ESRI

Research carried out by the Economic and Social Research Institute (ESRI) shows that investment by small and medium-sized firms remains below pre-pandemic levels, when adjusted for inflation. 

The think-tank's study shows that nearly 60% of SMEs (small and medium-sized enterprises) invested in capital assets in 2023. 

This represented an increase from 2020 and 2021 (55% of SMEs) but was still below the pre-pandemic level of 64%. 

Decarbonisation challenge 

The ESRI says that, while the mean and median amounts of investments have increased and recovered to pre-pandemic levels, these figures are below the 2019 level after accounting for changes in price levels. 

The report’s lead author, Dr Conor O’Toole described the findings as “concerning”, given the importance of investment for long-term growth. 

“In particular, a notable fall-off in climate-related investments represents a challenge for the decarbonisation pathway,” he stated. 

Investments linked to climate and energy efficiency investments fell in 2023, both in terms of the proportion of firms and median expenditure (from €34,000 to €20,000). 

Digital figure falls 

At the same time, the proportion of SMEs indicating that climate-change adaptation was important for their business fell across all sectors and SMEs of all sizes. 

The study also shows that 36% of firms invested in digital assets in 2023 – down from 41% in 2021. Among those who invested in digital assets, the median spend was €6,000. 

Overall, 18% of firms invested in buildings, 28% in transport equipment, and 42% in machinery and equipment.