Companies optimistic about 2017 despite facing uncertainties
Northern Ireland's planning for Brexit is being hampered by a lack of direction from the UK government, a major business organisation said today.
Nonetheless, the Chamber of Commerce and Industry (NI Chamber) said that there was optimism from businesses as they faced 2017 with "determination and ambition".
But they faced uncertainties including the impact of the apprenticeship levy and the new living wage, as well as Brexit and the resulting fall in the value of sterling," the Chamber added.
The new National Living Wage of £7.20 per hour for over-25s, along with an apprenticeship levy of 0.5% of a company's total pay bill, where it exceeds £3m, will be introduced in April.
Chamber president Nick Coburn said: "Whilst June 2016 will forever be known as the month the UK voted to leave the EU, 2017 will surely be the year when some detail finally gets put onto that decision.
"At the moment there is no clear direction of travel from the UK government and that makes it difficult for the Northern Ireland Executive to plan accordingly."
He said that the future prosperity of Northern Ireland economy was dependent on a continued soft border with the Republic - along with guarantees that EU employees would be able to remain in their jobs.
Mr Coburn - who is also chief executive of Ulster Carpets in Portadown - said a hard border would be a "major setback in economic, social and political relations between the two jurisdictions".
"Being able to trade as freely as possible with the Republic with limited bureaucracy and freedom of movement of people living and working on both sides of the border should be a top priority for government in any negotiations."
And he said the organisation wanted to see continued free movement of people.
Mr Coburn said the Chamber was also looking forward to the publication of the Programme for Government (PfG) early in the year. He said the PfG had "delivery of a competitive economy as a priority and we fully support that aim". And he said that achieving a reduction in corporation tax to 12.5% in April next year, down from its present 20%, was ever-important, adding that "it is absolutely vital that nothing knocks that objective off-course".
Mr Coburn said energy also remained a pressing issue for companies. He said the decision last month by An Bord Pleanala to grant planning permission to the southern part of the North South Interconnector underlined the urgency for the green light to be given in Northern Ireland following a planning inquiry to be held next month.
The Chamber has said that the interconnector was needed to ensure that the all-island electricity market operated to its full potential, and to keep electricity prices as low as possible.
The introduction of the apprenticeship levy and new National Living Wage were also onerous burdens for employers. He added that the practicalities of the levy were unclear in a devolved context.
"How will businesses access the fund? How will it work for businesses that are multinational and train centrally or businesses that have staff working outside Northern Ireland?" he said.
"Will the funds received from the levy in Northern Ireland be ring-fenced for apprenticeship/skills funding only? These are just some of the questions that still remain unanswered as we approach the levy's April 2017 implementation date."
He said the Chamber's research indicated that sharp increases in the National Living Wage were leading to firms cutting costs.
"It is therefore important that the UK government retains a flexible approach in line with economic conditions when setting rates between now and 2020 in order to protect businesses and jobs."
Meanwhile, the Central Bank of Ireland has begun laying the groundwork to accommodate a significant number of London-based financial services firms looking to move their operations to Dublin in the wake of Brexit.
Gerry Cross, its director of policy and risk, said the bank was poised to help businesses "think constructively" about relocation.