Belfast Telegraph

Jobs fears stalk firms linked to public sector

By Clare Weir

A new report has revealed that Northern Ireland is not yet out of the woods economically — and that the situation may worsen as a result of planned cuts to the public sector.

In its latest Business Monitor, north-south trade body InterTradeIreland reports “fragile improvements” in sales and employment expectations among Northern Ireland firms despite a difficult environment.

However, warnings continue to be sounded about future dangers surrounding planned cuts in public spending with nearly one in three firms (27%) selling to the public sector.

The findings indicate one in five Northern Ireland firms were unprofitable during the past 12 months.

Just 41% of Northern Ireland businesses expect sales to increase in the next 12 months and 18% expect to take on new staff in the coming year. Just over 70% plan to undertake some form of innovation in the next 12 months.

Just under one third (30%) reported that the recession has had a severe negative impact on their business .Nearly half (49%) of businesses |across the island have reported a reduction in their prices.

Aidan Gough, InterTradeIreland strategy and policy director, said that there are still “real dangers” ahead.

“The construction and professional services sectors are most at risk with almost half of firms operating in that industry reliant on public sector work,” he said.

“However secondary effects, such as reduced consumer spending as a result of job losses, will impact across all sectors.

“There has been an increase in the number of businesses who are reporting a rise in sales, and businesses reporting they were to initiate redundancies have also fallen.

“Businesses are facing up to change and are learning that they must innovate and change their outlook and their business models.

“Many of those who are surviving are driving down costs and prices in this way.

“But we are still in negative territory.

“It is disturbing that just over six out of 10, or 62% of firms on both sides of the border, don’t have a formal business plan — it reminds me of the old saying, fail to plan, plan to fail.

“Having a strategic plan in place will be crucial in preparing for recovery and future growth.

“The trends are the same in the north and in the Republic, but the situation in the Republic is much worse.”

Economist John Simpson said the figures make for depressing reading.

“Saying 41% of businesses are expecting sales to increase over the coming year reads like a positive — but it means that 59% don’t,” he said.

“Likewise, 18% expect to take on new staff means that 82% don’t. One out of five businesses is unprofitable — that’s 20%. A big margin.

“This report makes for bleak reading — there are some huge |negatives. Conversely, the Government spending cuts are meant to be saving and strengthening the economy in the long run, so it will not be bad news across the board.”

Belfast Telegraph