No business recovery expected for two years
Businesses in Northern Ireland fear they are heading for an even deeper economic downturn from which they may not recover for two or more years, according to research carried out exclusively for Business Telegraph.
A large majority of the firms (74%) surveyed by Goldblatt McGuigan also said they feared public sector cuts would have a negative impact on their businesses.
Just over 70% said they lacked confidence in the prospects for business over the next six months.
Goldblatt McGuigan managing partner Sam Goldblatt said the wait for details from the Executive on Northern Ireland’s Budget following the Comprehensive Spending Review was making life harder for businesses.
“It would appear politicians have reached an impasse. While politicians may be able to stall decision making, businesses cannot. Indecision and |uncertainty significantly impacts on business confidence.
“Our survey findings suggest the Government’s hope that any shrinking of the public sector will be counteracted by growth in the private business sector are overly optimistic and more likely unrealistic,” he said.
At 65%, a majority of businesses said they did not expect Northern Ireland to come out of recession until 2012, which Mr Goldblatt said “will surely ring alarm bells within the Northern Ireland Executive and the UK Coalition Government as they seek to deliver sustained recovery”.
The firm asked 280 businesses for their views of Northern Ireland economy, and just over half (52%) said they believed Northern Ireland was heading for a deeper recession.
Confidence was also low, with 59% saying they were not confident about business prospects for the next six months and 12% very concerned.
Just under one fifth (19%) of businesses said they were confident about their prospects and 10% described themselves as being very confident.
Around 40% said the economy was at the bottom of a recession while 8% said it was recovering, but none of the respondents said they believed the economy was growing.
Less than a third were expecting recovery during the second half of next year, while 41% expected an upturn by 2012. Just under a quarter felt the recovery would not come until 2013.
A lack of sales (40%), increased competition and discounting (21%) and the increased cost of overheads and supplies (12%) emerged as the main challenges currently being faced by the businesses. Mr Goldblatt said the findings suggested conflict |between businesses’ experience and official statistical findings. The Office of National Statistics found a 0.1% growth in UK GDP for the last three months of 2009, officially spelling the end of the recession, while a production survey in April for Northern Ireland found a 0.2% increase in manufacturing output during the same period.
“It is clear that the statistical analysis of the state of our economy is not in line with the experience of individual local businesses,” Mr Goldblatt said.
“That 52% of the businesses surveyed believe that the local economy is heading into a deeper recession, or returning to a deeper recession if the earlier economic statistics were accurate, surely illustrates the low level of economic activity being experienced by the private sector.”