Irish business sentiment suffers sharpest quarterly drop since 2010

DUBLIN, Aug 18 (Reuters) - Irish business sentiment suffered its sharpest quarterly fall since 2010 on concerns about Britain's vote to leave the European Union, a survey showed on Thursday.

But the authors said the result remained consistent with a growth rate of 3.5-4 percent, slightly ahead of the 3.4 percent growth forecast by the government in the aftermath of Britain's June 23 vote.

The KBC Bank/Chartered Accountants Ireland Business Sentiment Index dropped to 99.9 in the three months to the end of July from 117.7 in the preceeding quarter, to hit its lowest level in three and a half years.

Britain accounts for 16 percent of Ireland (Other OTC: IRLD - news) 's exports, but this rockets up to 44 percent when foreign-owned firms operating out of Ireland are excluded.

Ten percent of companies surveyed said they now saw the main issue for them as the potential relocation of some element of their activities between the United Kingdom and Ireland.

But while companies downgraded expectations for the general economic environment, they continue to signal healthy growth in their own activities.

The survey "should be seen as a broadly based recognition of increased risks to Irish economic prospects rather than a sign of panic or any dramatic deterioration in current conditions," Chartered Accountants Ireland Chief Executive Pat Costello said in a statement. (Reporting by Conor Humphries; Editing by Toby Chopra)