Recovery ‘still slow’ but companies living in hope
An exclusive survey by Goldblatt McGuigan for the Business Telegraph shows that our businesses are looking forward with cautious confidence
Most Northern Ireland businesses are confident about their business prospects for this year, an exclusive survey for Business Telegraph has found.
Yet the confidence among 155 companies — interviewed by professional services firm Goldblatt McGuigan — is tempered with caution about the timing of economic recovery in the province.
This caution was expressed despite statistics which showed the UK economy grew by 0.1% in the last quarter of 2009, signalling the official end of the longest recession since the 1950s.
In fact, none of the companies surveyed by Goldblatt McGuigan thought there would be evidence of recovery in Northern Ireland between now and March.
Just over a third thought there could be stirrings of recovery |by September, and less than |half thought there would be tangible improvement by the end of the year.
At 53%, the balance of opinion favoured recovery in 2011. Only 29% could detect ‘green shoots’ of recovery in the economy at the present time.
While 56% were confident about their prospects — and just under a quarter were so confident they hoped to boost the size of their workforce during the year — around 15% thought they would have to cut jobs in 2010.
Tom Lenehan, director of corporate finance at Goldblatt McGuigan, said the survey findings were in “stark contrast” to the official UK statistics of this week.
“While 25% expect recovery in quarter three the majority [52%] do not expect the local economy to emerge from recession until 2011. Likewise, the ‘green shoots of recovery’, that have been much trumpeted nationally are less evident locally with 29% of businesses having seen some evidence, but 44% still waiting for the shoots to appear.
“On the employment front there are, again, some signs of optimism with 24% hoping to increase the number they employ during the year and the majority [61%] planning to maintain their current employment levels.
“The lag between the job market and the first reports of recovery mean that 15% of businesses still expect to lay off staff during 2010. This is a worryingly high |figure and for these businesses the end of recession is still not |in sight.”
Two thirds of businesses surveyed saw declining sales in 2009, with 19% gloomily reporting a major slump. Mr Lenehan said: “It is encouraging, therefore, to see 51% of businesses saying that they are confident about their prospects in 2010. This level of optimism, however, is tempered by the 39% who are not confident and the worrying 5% who said they were very concerned about their prospects for the year ahead.”
Businesses also pointed to a lack of sales, competition and discounting, cash flow problems and
a fall in profits as their biggest challenges.
“These are very obviously ‘cause and effect’ issues with competitive pressures on sales volumes and prices being the critical factor,” Mr Lenehan said.
“In conclusion, while it is clear that the local business community does not consider itself out of the woods recession-wise, there are signs of hope on the horizon.
“Shoots of economic recovery are emerging and for some this will bring growth in 2010. For others, however, the prospects for the year are at best uncertain and at worst, bleak. For these businesses, the recent hype about economic recovery must surely be hard very hard to believe.”
The Goldblatt McGuigan business survey was conducted between January 18 and 22 among 155 private sector businesses, large and small. Three companies reported mixed views of what 2010 might hold for them. Peter Dixon, group chief executive of Phoenix Energy Holdings, said: “One of the biggest challenges facing our business is government red tape. While we enjoyed strong growth in 2009 and look forward to 2010 with confidence, government bureaucracy is restricting our growth.”
Dermot McIlroy, owner of McIlroy Musical Instruments, said: “Keeping up with the demand for our products is my biggest challenge. We manufacture approximately 80 quality guitars a year, but the international demand is such that we could sell hundreds. We have already sold our production capacity for 2011.”
Colin Reid, chief executive of Consilium Technologies, said: “As providers of IT solutions to local government and social housing bodies we expect 2010 to be challenging in terms of a reduction in public expenditure levels.” But he said the company’s software could save customers money, adding “we are committed to the continued development of our business and our skills base and plan to |increase our employment levels during the year”.