The latest Quarterly Economic Survey published by Northern Ireland Chamber of Commerce and Industry (NI Chamber) and business advisors BDO suggests that Northern Ireland’s economy is in decline, as businesses feel the harsh effects of the Brexit impasse and the fall out and frustration from the protracted absence of a functioning Executive at Stormont.
The survey brings to light serious concerns around economic and particularly political instability in Northern Ireland and the UK, with almost four in five local business leaders believing that a recession in Northern Ireland is likely in the next six to 12 months.
Significantly, around half of members have also scaled back or put on hold investment and growth plans on the back of the UK’s vote to leave the EU.
The latest QES provides evidence that much of the Northern Ireland economy’s post recovery gain has been eroded following the Brexit vote.
Order books in both the manufacturing and services sectors are very weak for both domestic (UK) sales and exports, with more firms in both sectors reporting a fall in orders over the next three months compared to those reporting a rise.
Cash flow has been a persistent problem for both manufacturing and services and the cash flow position of both also deteriorated this quarter.
Previous survey evidence highlighted that businesses have been trying to remain confident around business prospects. However, the Q3 findings would suggest that this confidence is being severely challenged with fewer members believing that turnover and/or profits in their business will grow in the next 12 months.
The findings highlight significant concerns for local manufacturers. The majority of key balances in Q3 were negative suggesting limited growth and potentially some contraction in the sector.
Manufacturing’s trade performance is the worst recorded by the QES in almost a decade with negative balances in terms of both domestic (-29 percentage points) and export (-10 percentage points) order books in the next three months.
This means that more manufacturers are expecting orders to fall over the next three months than those expecting them to rise.
Previously strong employment balances have weakened considerably and Northern Ireland is the poorest performing UK region on this measure.
The sector’s cash flow position remains precarious with a negative cash flow balance (-16 percentage points) in Q3, lowest across the 12 UK regions. Balances around confidence in growth and investment are also negative.
Commenting on the results, Ann McGregor, Chief Executive, Northern Ireland Chamber of Commerce and Industry, said: “These figures are tangible warning signs about current economic conditions in Northern Ireland, with this quarter’s performance being arguably the weakest in almost a decade.
When compared to other regions across the UK who undertook the same survey, Northern Ireland ranked bottom for eight of the 14 key manufacturing balances and 10 of the 14 key services balances.
“This is clear evidence that the impact of the ongoing Brexit uncertainty is being felt more harshly in Northern Ireland than anywhere else.
“The lack of a functioning Executive visibly adds to this uncertainty and combined with Brexit, creates an environment where key strategic business decisions are being abandoned or delayed.
“The Northern Ireland economy cannot flourish without investment by our local businesses and they need the support of government to create an environment which is conducive to this.
“This is not scaremongering – it is a stark reality check for business leaders, employers, politicians and anyone with a vested interest in the Northern Ireland economy.
“Behind each and every one of these statistics sit thousands of real, local businesses who are feeling the harsh impacts of Brexit uncertainty and the political vacuum at Stormont.
“As we reach a crunch stage in negotiations, the prosperity of our business community and wellbeing of our citizens is on the line.
“We need to see immediate action to avoid a messy and disorderly Brexit on 31 October and must have the institutions at Stormont restored urgently – the future success of our economy depends on it.”