A LACK of a Stormont Executive is damaging the north's economy, with over one in four businesses now in favour of direct rule, a new survey shows.
The latest Northern Ireland Chamber of Commerce (NI Chamber) and BDO Quarterly Economic Survey has revealed a modest improvement in business performance for the period April to June, but growth remains subdued, with the Stormont impasse and Brexit uncertainty key concerns.
The research highlights that the lack of a devolved government is adversely affecting local business, with over half of members surveyed (55 per cent) stating their main concern in relation to future growth is centred on how Northern Ireland is governed, closely followed by Brexit (53 per cent). When asked what should be done to ensure key strategic and spending decisions are taken, 27 per cent favoured the introduction of direct rule, just ahead of a return to devolution (25 per cent).
Brexit is taking its toll on business in the north, with one in three members stating the uncertainty has directly contributed to a fall in turnover/sales, while almost half of those surveyed (46 per cent) highlighted rising costs arising from the vote as the most negative impact. Over a third of members (37 per cent) said they are now scaling down or freezing growth plans due to Brexit compared to 10 per cent expanding, while a negative impact on the employment of non-UK nationals for over a quarter of businesses (26 per cent) was also recorded.
After a challenging start to the year manufacturing saw a pickup in the second quarter of the year, with only one of the 14 key balances in negative territory and most up on the previous three months. Recruitment expectations and investment intentions both increased, while confidence around turnover and profitability is on an upward trajectory. In spite of the relative positivity within the sector Northern Ireland remains one of the poorest performing UK regions.
The services sector experienced modest growth after a sluggish start to the year, with export sales and orders balances in positive territory. The north also recorded the highest share of services business in the UK working at full capacity (46 per cent). Confidence within the sector, continues to weaken however, with investment intentions falling and a negative cashflow balance among the weakest of the 12 UK regions.
Of greatest concern for businesses continues to be issues in relation to recruitment, with three in four now reporting difficulties, the most acute of which is seen within manufacturing.Competition is another growing concern for 44 per cent of members.
Looking ahead and seven in 10 members (69 per cent) said they are planning grow their business in the next three to five years, compared with 12 per cent with no plans and 19 per cent recorded as unsure.
Chief executive of NI Chamber, Ann McGregor said action must be taken to help put the local economy on a surer footing.
"There is no doubt that business confidence would rise if we had an Executive restored immediately to focus on the fundamentals for business – such as improving infrastructure, incentivising investment and addressing the skills shortage.
“Big, bold action is needed with major new incentives for business investment, confidence-boosting infrastructure projects, and a concerted effort to slash the up-front cost of doing business, which is putting consumer-facing businesses especially under intense pressure.”
Brian Murphy, managing partner at BDO highlighted the growing manufacturing sector as a positive from the survey:
"This is to be welcomed as a sign of the strength, determination and resilience of the private sector in Northern Ireland," he said.
