Businesses battling to survive downturn
Almost one in four businesses in Northern Ireland are battling to survive the recession, a survey has today revealed.
The latest Goldblatt McGuigan poll showed that 36% of local firms described their current business objective as ‘to survive’.
The stark findings came as Ulster Bank today published another gloomy quarterly economic review. A massive 60% of respondents said they suffered a decline in sales performance in the first three months of 2009 compared to 2008.
Commenting on the findings Tom Lenehan, Corporate Finance director Goldblatt McGuigan, said: “These are very difficult times and it comes as no surprise that with revenues declining the best many businesses are hoping for is to survive the current turmoil in the hope of better times ahead.”
On a positive note 16% of Northern Ireland businesses stated that they have experienced growth in the first quarter of 2009 while 30% described their current business objective as ‘to grow’.
And when it came to the financial institutions, 29% of businesses in the province claimed their relationship with their bank had worsened.
Almost half of respondents, 42%, attributed that to banks tightening their lending criteria while 29% said fees had increased.
The perceived reluctance of the banks to lend or give credit is reflected in a low volume of commercial banking activity amongst respondents. Just 14% of the businesses surveyed had approached a bank for a business loan in the past year and only 19% had sought to obtain or extend an overdraft.
However, it’s not all bad news of the 14% of businesses that had sought a loan, 88% were successful.
Mr Lenehan said: “The lack of commercial banking activity has been well documented nationally and the findings of our survey show that locally too, there are very few new commercial loans being made.
“The reasons for this, I believe, are twofold. Firstly the banks are primarily focused on re-building their capital bases and their profitability and, as a result, are only interested in lower risk opportunities.
“Secondly, given the current economic climate, many businesses, even those that are weathering the storm, have put their capital investment plans on ice, concerned about taking on additional pressures in such uncertain times.”
He added: “The economic turmoil of the past year has made commerce and industry, whatever sector you are in, quite literally a much more ‘risky business’ than ever before and those banks that are prepared to lend are pricing for risk.”
The Goldblatt McGuigan Business Survey was conducted by Perceptive Insight Market Research by telephone interview with a sample of 111 local businesses, representing a cross section of private sector enterprises, large and small.