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Uncertainty damaging as customers raise concerns over future

Stephen Kelly, chief executive of lobby group Manufacturing NI, sets out the cold, hard facts on exports, the EU and us... while Adrian Weckler says Ireland must start poaching tech firms from Northern Ireland and the rest of the UK

Published 01/03/2016

There are still many tough decisions to be made before the EU referendum takes place on June 23
There are still many tough decisions to be made before the EU referendum takes place on June 23

The 'Brexit' debate is now less than two weeks old and we have almost four months still to run. It's important that any local debate, on the pros and cons, is populated with fact and not fear. What is emerging is that business requires certainty. It's important that both sides of the debate confirm, not speculate, on what will happen next. Business does not want barriers to trade, particularly for those who sell into that almost £3bn EU market or indeed who leverage EU Trade Agreements with other parts of the world which are worth an additional £3bn.

Uncertainty is as damaging as action - we're already aware of businesses holding off investment, EU customers raising concerns about what happens beyond June 23 and the reaction of the markets to news of the referendum. Our manufacturing sector remains brittle and we need to make sure that the conditions are created - whether through a vote to remain or leave - that we are empowered and tooled up to realise our export potential and grow our economy.

For small open economies, like ours, exports are an important driver of economic growth. They provide us with an external source of demand which can help compensate for a lack of domestic scale, and allow a developed economy to tap into potentially faster growth in emerging markets. Exports also help to support demand in non-export sectors through economic multiplier effects.

In 2012 manufacturing accounted for 61% of all goods and services exported by Northern Ireland companies. Consequently, as Northern Ireland's largest exporting sector, and therefore source of export revenue, manufacturing plays an important role in supporting the province's economic growth.

The Manufacturing Sales and Exports Survey, undertaken by the Department of Enterprise, Trade and Investment (DETI), provides more timely information concerning the performance of Northern Ireland manufacturing sales and exports. It reveals that manufacturing turnover reached £18.1bn in 2014. Of this sales total, £14.3bn was generated from markets outside of Northern Ireland - equivalent to 79% of total sales. Some £8.3bn (58%) of these external sales were destined for the British market and the remaining £6bn consisted of exports. Manufacturing exports in 2014 actually fell by 1.5% from the 2013 level, caused by a decrease in sales to the rest of the world.

The manufacture of food, beverages and tobacco accounted for the largest share of manufacturing exports at 28%. Manufacturing firms of all sizes contribute to Northern Ireland's exports. In 2014, small and medium-sized firms (firms with less than 250 employees) posted export sales of £1.9bn, accounting for almost one-third of total exports.

The Republic of Ireland is Northern Ireland's largest single market for manufactured exports, accounting for more than £1.4bn in sales in 2014, equivalent to 23.5% of total exports. The rest of the EU accounted for a further 25% of manufactured exports, with Switzerland, Germany and France the largest markets. More than half of Northern Ireland's manufacturing exports are destined for markets outside the EU. North America is the largest non-EU export market, accounting for over £1.1bn of sales, with Asia also a significant destination.

The mix of destinations and increasing globalisation of trade is important given the range of expected rates of growth across the globe. Ireland is expected to grow significantly faster than the world average over the next decade, and should provide strong demand for Northern Ireland's exports. Above average growth is also forecast for Asia, the Middle East and Africa that collectively account for 12% of manufactured exports. Growth in these markets will be an important source of demand, as we expect US and European GDP growth to be slower than the world average. Nonetheless, the size of these markets means they will continue to be an important driver of our manufacturing sector.

Belfast Telegraph

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