MOMENTUM is building around the Northern Ireland Investment Summit.
Dates have been announced and Lord Johnson, the UK Minister for Investment, has been dialling up the opportunity – citing that big capital investors are already ‘very excited’ about prospects in Belfast and Northern Ireland.
The summit was first announced when Biden touched down on these shores in April and he and Rishi Sunak briefly met shortly after the President disembarked Airforce One.
Speaking then, Mr Sunak said: “Northern Ireland, like the rest of the UK, is teeming with opportunities, talent and ingenuity. The biggest thing we can do to improve people’s standard of living and secure a prosperous and thriving Northern Ireland, is economic growth. That’s something I’m relentlessly focused on delivering.”
And herein lies the opportunity – and perhaps the challenge. Foreign direct investment (FDI) is a big deal. And a good relationship with Uncle Sam helps.
The United States is one of the largest sources of foreign investment into Northern Ireland, putting £1.5 billion into its economy over the last decade and creating 13,000 jobs. Currently around 1,000 US-owned businesses operate in Northern Ireland and that number looks set to increase.
FDI is also a much talked about benefit of Brexit – particularly in Northern Ireland.
Brexit officially ‘got done’ in January 2020. We haven’t exactly been inundated with FDI since, largely because of the confused status this region found itself in - and the political turmoil it continues to trigger.
According to the ONS the region landed 32 new FDI projects in 2021/22, creating 2,112 jobs.
Arguably this could have been so much more – but political instability is one sure fire way to make investors jittery.
The Prime Minister hopes the Windsor Agreement will unlock further FDI and laterally drive job creation – if this happens it will be brilliant for the local economy.
In fact, with genuine scale, it may well deliver the economic growth Sunak is so keen to support.
However, when you position it against the backdrop of public spending, it really needs to.
We are all aware of the budget challenges here in Northern Ireland, one by one each Minister-less Government Department in recent months has cited chronic double-digit underfunding.
Whilst many think that a restoration of the Assembly at Stormont will come with a sweetener (it’s a tried and tested approach that the DUP have become particularly adept at), the truth is – any windfall might plug a gap, but it will fall a long way short of addressing the issues of a structurally underfunded region that relies on public spending to prop up the notion of a progressive economy.
Sunak knows the economic headwinds are potentially precarious – Northern Ireland needs to perform as a region to take pressure off the public purse.
The United Kingdom has been the slowest developed nation in terms of post covid economic recovery whilst the current tax burden is the biggest it has been since the Second World War.
Persistent inflation also means raising funds is even more challenging with UK bonds among the worst performing across major developing economies this year.
The United Kingdom once had a fantastic track record in terms of FDI. Between 2010 and 2016 the UK was the undisputed European capital for FDI.
In 2019 France overtook the United Kingdom, in terms of new FDI projects, for the first time in 20 years.
One can’t help but wonder what caused the UK Government to take their eye off the ball?
All of these factors help explain why there is much hope pinned to the Northern Ireland Investment Summit.
Hailed as a genuine opportunity to connect international investors with local businesses, it is pitched to showcase the region’s innovation and technological strengths.
And with all these things – there often comes an element of theatre too.
The Prime Minister is set to attend, and it’s likely he will come bearing gifts. But will it be enough?
Ross Boyd is founder and managing director at RB Chartered Accountants (RBCA)