Belfast Telegraph

£2.9bn slump in Northern Ireland sales to Britain driven by Gallaher closure: expert

 

By Ryan McAleer

The devastating economic cost to Northern Ireland following the closure of the JTI Gallaher tobacco plant in Ballymena has been borne out in new Government data, economists have said.

Separate reports released yesterday unveiled a £2.9bn or 20% slump in export sales by Northern Ireland companies into Britain during 2017, while the Mid and East Antrim council area recorded the biggest loss in gross value added (GVA) in the UK.

Export sales to EU countries apart from the Republic fell by £269m (12.1%) to £2bn.

However exports to the Republic increased by £540m or 16.2% over the year to a record £3.9bn.

Sales to the rest of the world also increased by £195m (4.8%) over the year to £4.3bn.

Total sales by companies in Northern Ireland were estimated to be worth £66.6bn in 2017 - down £1.1bn on 2016 (1.7%). Within Northern Ireland, sales increased by £1.3bn to £45.2bn, up 2.9% over the year.

The £2.9bn slide in sales to Great Britain was the first recorded decline since the survey began in 2011.

Exports to Britain are now worth £11.3bn to Northern Ireland's economy.

The Northern Ireland Statistics and Research Agency said the slump was driven by "a substantial fall in sales" in the manufacturing sub sector of food, beverages and tobacco.

Ulster Bank chief economist Richard Ramsey said the figures reflected the growth in exports to the rest of the world due to strong global growth, while the weakness of the pound against the euro contributed to a big boost in sales to the Republic, with wholesale and retail trade up 13% over the year.

However he said the considerable slump in exports to GB and the rest of the EU, was primarily down to the closure of JTI Gallaher.

The Co Antrim factory, which once employed 800 people, closed in October 2017.

The loss of the cigarette plant was part of a double blow to Ballymena alongside the phased closure of tyre maker Michelin.

"Going forward we now have no tobacco industry whatsoever," Mr Ramsey said.

"Food and drink in my view during 2017 will show growth, so most of that (slump) must be attributed to JTI."

Michael Bell of the NI Food and Drink Association agreed.

He said: "Food and drink sales have been performing very well, given the turbulence in the market place over the last two years.

"Over the last decade, Northern Ireland's food and drink industry has actually doubled its output by value."

Stephen Kelly of Manufacturing NI added that the data reflected the fragility of the sector.

"Losing one large firm has a big detrimental impact," he said. "Only 1% of our manufacturing firms are large, employing more than 250 people.

"But they account for half of turnover and half of jobs.

"We must not create conditions which force them out."

Economist Jordan Buchanan said the latest GVA report from the Office of National Statistics (ONS) also reflected the local impact of JTI. GVA measures of the value of goods and services produced in an area, industry or sector of an economy.

"The manufacturing of beverages and tobacco sector's output has fallen by almost £350m last year. This is largely the closure of JTI in Ballymena," he said.

"This one closure has taken just under 1% off the total GVA of the whole of the local economy."

GVA in Northern Ireland was estimated to have increased by 1.7% in 2017.

Mr Ramsey said he expects the 2018 figures to reflect a smaller increase to around 1.5%, which could fall to 1% in 2019.

"I think in the second half of 2019 we're going to see more people talking about the potential for a recession," he added.

Yesterday's new ONS data revealed that Belfast is now ranked as number five in the table for UK's top 10 areas for GVA added per head.

The table is dominated by some of the wealthiest areas of London, including the city's financial district and Westminster.

In contrast, four Northern Ireland council areas make up the five lowest performing areas in the UK. Ards and North Down, Causeway Coast and Glens and Fermanagh and Omagh sit at the very bottom of the UK rankings. Newry, Mourne and Down and Mid and East Antrim are also in the bottom 10.

In terms of annual change, Causeway Coast and Glens recorded the best improvement in the UK (8.9%).

Belfast Telegraph

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