Northern Ireland firms cut investment over uncertainty linked to EU vote
A third of Northern Ireland businesses have scaled back growth or investment as a result of the vote to leave the EU, according to a survey.
A quarter of companies believe economic prospects are poor in the short to medium term, the latest quarterly study from the Northern Ireland Chamber of Commerce, in conjunction with and financial services firm BDO, suggested.
Some 42% of businesses quizzed said costs had risen following the Brexit vote in June.
However, some companies are optimistic about what the vote to leave the EU can offer. Around 24% said Brexit could generate good or excellent prospects in the short to medium term.
Overall, Northern Irish businesses enjoyed stilted growth during the third quarter, and confidence around turnover and profitability fell.
However, the local services sector picked up, outpacing the rest of the UK.
Manufacturing exports also increased, buoyed by a weak pound, but domestic sales were at their lowest level since the start of 2013.
Currency fluctuations remain a concern for companies, with more than half of businesses citing it as an issue as the pound continues to weaken.
Chamber chief executive Ann McGregor said the latest survey showed that the third quarter had been "particularly challenging for businesses, and growth appears to have slowed since the EU referendum".
"Although it is important not to take one quarter's figures in isolation, the outcome of the EU referendum vote, the continued uncertainty surrounding it and sterling's response through depreciation has had a tangible impact on business growth and sentiment," she added.
The survey suggested that while the Northern Ireland economy is still growing, "confidence around turnover and particularly profitability has fallen, recruitment intentions are lower and investment intentions have taken a significant hit".
Ms McGregor said members remained concerned about the devaluation in the pound and whether the free movement of goods and services would be hindered by Brexit.
"Sterling's devaluation is a particular concern for members," she added. "It has provided a welcome boost to exporters, but it is putting significant pressure on costs, particularly for local manufacturers.
"This will impact on businesses' bottom lines, and we are already starting to see members' confidence - around profitability particularly - being eroded. It is only a matter of time before this will start putting upward pressure on prices.
"Our members consider retaining the freedom of movement of goods, services, capital and people within the EU as a top priority.
"Whatever terms are negotiated with the EU, it is crucial that tariff and non-tariff barriers are minimised, that the skills of existing EU workers can be retained and that businesses in Northern Ireland are able to attract EU nationals to meet future skills needs with minimal bureaucracy, costs or barriers."
Brian Murphy, partner at BDO, added: "Clearly, the uncertainty surrounding Brexit is having an impact on business confidence in the local market, with many putting planned expansion and recruitment on hold.
"This is an understandable reaction to a very unique situation. However, it is reassuring that some remain optimistic and confident about the future growth of their business in the medium to longer term once it becomes clear what Brexit will look like.
"It is also encouraging that businesses are talking about maintaining staffing levels, rather than reducing them.
"Given Northern Ireland's unique status as the only part of the country that shares a land border with the eurozone, it is also clear that there have been benefits for many local businesses, which have been able to capitalise on the strength of the euro against the pound in recent months."