Belfast Telegraph

Business confidence in region collapses

Business confidence in Northern Ireland is in its steepest decline since April last year, with the freezing temperatures further chilling spirits, fresh research said.

Small companies are suffering from falling demand, fears of further cuts and the effects of the Irish Republic's economic woes, according to an economic outlook published by PricewaterhouseCoopers.

Esmond Birnie, chief Northern Ireland economist at PwC, said difficulties over the border were impacting directly on Northern Ireland.

"With 10% of local manufacturing output - worth £1.5bn a year - historically destined for the south, exporters have to look elsewhere for opportunities and sales."

Yet new vigour in the Republic's economy in 2011 would not affect a gloomy prognosis for the province as Northern Ireland would not benefit, the PwC outlook suggests.

"Next year, while we expect a recovery in the Republic's manufacturing exports and positive economic growth, we do not see this having a significant impact on the fortunes of Northern Ireland."

Mr Birnie said private sector confidence has been flat for 35 months. November business confidence showed the most significant fall since April 2009.

The outlook also predicts 2010 economic growth in Northern Ireland will be just 1% - well below the 1.8% estimate for the UK.

It said Northern Ireland might expect growth of around 1.8% in 2011, but that consumer confidence, property prices and commercial bank lending will remain subdued.

Mr Birnie added: "Confidence continues to decline in the service and construction sectors, however manufacturing sector confidence has stabilised, possibly because exporters are more competitive due to a weakened pound.

"However, serious concerns remain about demand, raw material costs and ultimately jobs."

He predicted the debate over lowering Northern Ireland's level of corporation tax would "come to a head very early in the new year".

He said PwC's predictions for unemployment to head towards 60,000 had been vindicated, with November seeing a claimant count of 58,500, adding: "There is no indication that unemployment has peaked. It may go higher still."

The outlook also warned that 331,000 people here - nearly a third of the working-age population - are economically inactive, the highest proportion of any of the 12 UK regions.