One in three businesses put growth plans on hold due to Brexit
BREXIT remains a key issue of concern for businesses in Northern Ireland with one in three putting plans for growth on hold in wake of the landmark vote.
The latest Quarterly Economic Survey published by Northern Ireland Chamber of Commerce and Industry in association with BDO, shows that despite signs of growth in the last quarter of 2017, the north remains one of the UK's weakest performing regions.
Brexit and the lack of a functioning Stomont Executive are the top concerns for members, with a growing share of businesses putting growth and investment plans on hold as a result of the EU referendum vote. Linked to this, foreign exchange rates are impacting on costs and putting pressure on prices.
According to the latest survey around one in five businesses have said their turnover has fallen due to Brexit, while almost half are experiencing an increase in costs , particularly rising raw material costs for manufacturers.
One in three (31 per cent) have scaled back growth and local investment plans because of Brexit, while 17 per cent have expanded their investment plans outside of the north in light of the vote. Over half (53 per cent) of those surveyed remain unaffected.
The Northern Ireland economy continued to show signs of growth in the last quarter of 2017 according to the survey, with both the manufacturing and service sectors recording positive balances in sales and jobs with a particularly strong export orders book for local manufacturers. Employment also improved in both sectors over the three months.
Despite all key balances remaining positive the service sector continued its lacklustre performance, as domestic sales and orders balances continued on the downward trend experienced since the end of 2016. Northern Ireland was also the only UK region ending 2017 with negative export balances, meaning more businesses reporting a fall in export sales and orders than those recording an increase.
In terms of business confidence the manufacturing sector recorded its highest levels over the last two years, with 56 per cent expecting turnover to improve over the 12 months, but confidence in the services sector is now at an all-time low of 31 per cent.
Overall two-thirds of members (64 per cent) expect their business to grow during 2018, however the outlook is less positive for the Northern Ireland economy with just one in three respondents predicting growth and 46 per cent expecting it to contract.
Chief executive of NI Chamber, Ann McGregor said despite "pockets of resilience and success" the bigger picture is one of slow economic growth amid uncertain trading conditions.
"Continued uncertainty over Brexit and the burden of upfront cost pressures facing businesses is likely to stifle business investment and put pressure on prices in an already challenging inflationary environment."
The Chamber head also highlighted key concerns such as productivity, the growing skills gaps and creaking physical infrastructure
"However without an Executive in place at Stormont it is difficult to address these challenges, and the survey reveals the continued frustration of our members at the lack of a functioning Executive. We cannot face 2018 without a government where Northern Ireland ministers take decisions on Northern Ireland matters.”
Brian Murphy, managing partner at BDO Northern Ireland, added:
"Without doubt, the challenges we in Northern Ireland face in respect of the uncertainty surrounding Brexit and the continued absence of a functioning Executive are many. However, this survey provides demonstrable proof that our local entrepreneurs are creative and resilient and are simply getting on with business.”