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Video: No surprise as coronavirus contributes to record fall in north's business activity

The coronavirus pandemic caused a steep contraction in the Northern Ireland private sector in March, with both output and new orders falling at the sharpest rates on record
Gary McDonald Business Editor

ULSTER Bank's regular monthly snapshot of business activity in the north has laid bare the devastating economic impact of the Covid-19 pandemic.

Its closely-watched PMI report for March points to a steep contraction in the private sector in Northern Ireland, with both output and new orders falling at the sharpest rates since the survey began in August 2002.

It also shows that companies were forced to reduce staffing levels substantially, while business confidence slumped to record lows.

It comes as a scenario published by the Office for Budget Responsibility says the UK economy could shrink by a whopping 35 per cent in the second quarter and see unemployment jump by two million.

Richard Ramsey discusses the effect of lockdown on business

The UK fiscal watchdog published an estimate of the potential impact based on a three-month lockdown followed by a three-month period when restrictions are only partially lifted.

On the PMI findings, Ulster Bank's chief economist in the north Richard Ramsey said: “Little did I know back in January when I was talking about the potential impact of coronavirus on the economy the extent to which it would come to affect all of our lives.

“At that stage, the concern was the indirect impact due to the lockdown in China, given its key role as a driver of global supply-chains and the world economy.

“But in just a short period of time coronavirus has gone from an external threat to a very real and present internal one here in Northern Ireland, Ireland, the UK and Europe as we are seeing a true pandemic and global economic lockdown."

The Ulster Bank findings for the north follow the eurozone’s PMI slumping to an all-time low in March, with Germany, France, Spain and Italy all posting record falls, while the Republic of Ireland reported its weakest month in 11 years.

Mr Ramsey added: “All 12 UK regions saw business activity plunge last month, but Northern Ireland reported the steepest decline as output and orders for local firms fall at their fastest pace since the survey began 18 years ago.

“Staffing levels are also being cut at their fastest rate in over nine-and-a-half years. Significantly, it is the services sector that is enduring the most alarming rates of decline, which isn't surprising given what's been happening to the hospitality sector."

And he warned: “As sobering as March’s data is, the reality is that things are going to get worse for the economy before they get better.

“Some 80 per cent of the respondents in the Northern Ireland survey replied before the full UK lockdown was announced on March 23, so in the April survey we can expect the pace of contraction to have accelerated further to fresh record lows.

“Our economy is enduring its fastest and deepest economic decline in a century, and only when the lockdowns are lifted will economists be able to gauge the strength and timing of a recovery in any meaningful way.”

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