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Warning over hospitality sector as Northern Ireland economy could be losing £48m a day


Concerned: Colin Neill

Concerned: Colin Neill

Concerned: Colin Neill

Northern Ireland could be losing almost £50m a day in economic output as the lockdown continues, according to estimates.

The stark figure emerged amid new warnings that our economic landscape is being dramatically reshaped by coronavirus, with some parts of the economy likely to take years to recover.

According to research by think-tank CEBR, the economy of the UK as a whole is losing £2.4bn a day as a result of the lockdown.

On the basis that Northern Ireland accounts for 2% of the UK's private sector output, the cost to our economy could amount to £48m per day.

Economists caution that all predictions and calculations are fraught with uncertainty, particularly given the distinct nature of Northern Ireland's economy, with its greater agricultural and public sectors, and smaller professional services sector.

The majority of the economy has been mothballed since the shutdown began three weeks ago, with large numbers of manufacturers and most builders downing tools.

Shops, hotels and restaurants have been forced to close, while office-based businesses have shunted activity to the homes of management and staff.

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Last week the Northern Ireland Chamber of Commerce said that 36% of its members had closed temporarily.

The construction industry is operating at between 5% and 10% of its normal capacity.

Colin Neill, the head of Hospitality Ulster, which represents pubs, bars and restaurants, said its members were facing increasingly pressing cashflow issues.

Andrew Webb, chief economist at business advisory firm Grant Thornton, said some sectors, such as tourism and leisure, may not recover from the crisis for up to three years.

"For the whole economy, a good outcome would see the economy come back by this quarter next year. If challenges now become ingrained, there could be a longer recovery period that could take two to three years to climb back from," he said.

Around 65,000 people in Northern Ireland work in the hospitality industry and the vast majority have now been furloughed.

Mr Neill said he was concerned about the survival rate of hospitality businesses.

"As well as initial support, we do need long-term support," he said.

"People still have their building costs like insurance and rent.

"It won't be about simply reopening but about rebuilding. How will businesses cope with any rules on social distancing which there might be?

"They'll need money to reopen with and buy new stock with.

"Overall, the hospitality sector has been first hit, hardest hit and will take the longest to recover."

With the average restaurant operating with two weeks cash in reserve, they were now running out of money and in many cases, could not afford to furlough staff.

Mark Spence, an associate director at the Construction Employers Federation, said members there were also facing cash flow problems.

"Furlough is a fantastic scheme but there is a time lapse with the money not available until the end of April," he said.

Up until the outbreak, there had been an increase in optimism in the industry.

Mr Spence added: "We're not very worried for a number of businesses which may not survive.

"Those with cash reserves might survive but others who went in not great shape to begin with may not come through."

Stephen Kelly, chief executive of Manufacturing NI, said he felt the sector here would take a greater hit than the UK.

He said there had been a campaign to have factories closed which did not happen in the UK.

"The impact on the provincial economy, outside the cities, is likely much more devastating given that is where most manufacturing is located and whose wider economy depends on a source of income for families and small consumer facing businesses," he added.