One in three businesses putting investment on hold due to Brexit

Brian Murphy (BDO), Maureen O’Reilly (Economist for the QES) and Chris Morrow (NI Chamber) pictured after the launch of the latest Quarterly Economic Survey. Picture by Darren Kidd/Press Eye
Gareth McKeown

One in three businesses in the north are scaling down operations or putting investment plans on hold due to Brexit according to the latest figures.

The Quarterly Economic Survey (QES) published by the Northern Ireland Chamber of Commerce and Industry and advisors BDO has revealed that a core of businesses continue to feel an immediate impact from the UK's vote to leave the European Union.

The findings, obtained from over 200 businesses in Northern Ireland show that one in five respondents experienced a fall in turnover in the first quarter of 2017 due to Brexit, although for 10 per cent this actually increased.

The most significant impact from the Brexit vote is around costs with almost one in two businesses experiencing an increase due to the sterling's devaluation and rising raw material costs for manufacturers, now at its highest level since 2011.

A whopping 84 per cent of manufacturers in the north reported the rising price of raw materials as the biggest factor in their increased costs, the second highest of all UK regions behind the north east of England.

Northern Ireland Chamber members said the three key priorities to driving business growth was a fully-functional Executive, no hard border with the Republic after Brexit and a lower corporation tax rate, with members urging local politicians to "grow up and get together" to end the Stormont impasse.

"We simply want an appropriate focus on the economy to allow business to drive wider economic prosperity. Please get on with Stormont," they said.

"There is still too much point scoring and not enough effort going in."

While the findings indicate business growth is steady, three quarters of manufacturers and two thirds of services have reported reported difficulties in recruitment, despite increasing intentions (two thirds) over the preceding three months.

The figures further show businesses are continuing to feel inflationary pressures.

Head of policy at NI Chamber Christopher Morrow said the rise in inflation seen since last year's EU referendum is the biggest immediate pressure facing most firms, but noted the political uncertainty was not welcome.

"Businesses do not like the current uncertainty caused by the lack of an Executive – especially given uncertainties already created through Brexit and the Prime Minister's decision to call a General Election in June," Mr Morrow said.

"Overall, the survey demonstrates the fact that there are long-standing structural issues here at home that we need to tackle to sustain success in the future. The competitiveness of firms depends on a fully functioning NI Executive, with a bold domestic economic policy, and a good Brexit deal," he added.

Partner at BDO Brian Murphy said business growth has remained "consistent and steady" across the manufacturing and services sectors, but warned inflation was a "considerable risk" to growth.

"Continued inflationary pressure results in consumers paying more, from the petrol pumps to the check-out tills. Therefore, many businesses who are planning to award pay increases in the year head may in fact find that the value of pay cheques may be less," he said

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