Belfast Telegraph

Politicians are depressing the Northern Ireland economy, claims commerce chief

By John Mulgrew

Politicians must "realise they are depressing the Northern Ireland economy" as the latest economic survey shows businesses have suffered a slowdown over the last three months.

The momentum in Northern Ireland's recovery slowed during the third quarter of the year, according to the latest survey from the Northern Ireland Chamber of Commerce and Industry and BDO.

Almost two thirds of businesses expect pay packets to rise in the coming year. Indeed, almost half of firms said they were under pressure to offer higher wages to attract new staff.

Confidence was falling among businesses, and the services sector - everything from eateries to estate agents - is now ranked in the bottom three performing UK regions across almost all performance areas.

Key aspects of the services sector weakened, and Northern Ireland was the poorest-off in the UK for domestic services sales.

It was also a "challenging" quarter for Northern Ireland manufacturing.

The balance of manufacturing firms taking on staff over the last three months fell sharply and fewer expected to increase their workforce over the coming months, according to the quarterly survey.

Yet manufacturing exports had improved during the quarter.

The mixed findings for manufacturing come as aerospace firm Bombardier, the province's biggest manufacturer, faces fears over the performance of its CSeries jet programme.

And generator maker Caterpillar NI in Larne also faces the effects of the slowdown in the global economy.

Ann McGregor, Northern Ireland Chamber of Commerce and Industry chief executive, said there "has been deterioration in most of the key balances across both manufacturing and services".

"We had been seeing a particularly strong improvement in business performance within the domestic economy for Northern Ireland businesses but this appears to have stalled this quarter," she said.

And she said the Stormont stalemate needed to be resolved to help Northern Ireland's economy.

"We are seven years out of recession but we still don't seem to be out of it," she said.

"We are happy exports are going up - but we need businesses to grow in Northern Ireland. We are on the side of business, and businesses need confidence.

"Those 'up on the hill' need to realise they are depressing the Northern Ireland economy."

Meanwhile, almost half of Northern Ireland businesses continue to be concerned about exchange rates - twice as many as in the rest of the UK.

Two thirds of firms said they were in support of paying the National Living Wage, despite concerns among those in the hospitality and the services sector.

But while almost 80% of those businesses quizzed said they already paid the £7.20 an hour wage, or more, 15% said they "could not afford to pay that rate".

BDO managing partner Peter Burnside said businesses would find it "difficult to react" to the quick introduction of the new higher wage.

He said the third quarter results were "disappointing" but "reflective of the precarious state of our economic recovery".

Bank of Ireland economist Alan Bridle said that a resolution at Stormont would "see a bit of bounce" in business confidence.

Looking ahead, Ulster Bank chief economist Richard Ramsey said 2016 will be tougher for businesses.

"There is going to be reduced demand going ahead, and that's one of the reasons business confidence is hit," he said.

"And one of the reasons why a lot of the firms appear to be lowering the expectations about hiring staff, is the amount of incoming work is slowing down."

He added: "One of the reasons why 2015 is still pretty good in overall growth is because it's been given a lift with inflation, food and fuel prices.

"That is not going to last into the early part of 2016."

Belfast Telegraph