More than 90% of businesses here say the economy could enter a recession if the current outlook continues, a fresh survey has said.
Meanwhile, around three quarters of Northern Ireland companies say they are adapting to new trading arrangements here.
But 25% of members say they continue to find the new arrangements challenging.
However, two thirds say the EU exit has negatively affected business costs, 54%, the ease of doing business, while 28% have stated that it has negatively impacted on overall sales performance while for 19% it has been positive for sales, according to the latest quarterly survey from the Northern Ireland Chamber of Commerce and Industry with BDO.
Some of the biggest challenges facing businesses here include spiralling costs as soaring inflation continues to bite.
Inflationary pressures are hitting 90% of businesses, according to the survey.
“In quarter two, labour costs have also emerged as a very strong driver for both the manufacturing and services sectors, affecting twice as many members in quarter two 2022 compared to quarter 2022.
“This is being driven in large part by challenges in recruiting staff. Rising utility and fuel costs are also key cost pressures.
The survey says during the second quarter of 2022, 83% of manufacturers and 75% of services businesses expecting to raise prices in the next three months.
Looking at general business performance, 52% of companies said they expect turnover to grow.
“While it is encouraging that a majority of our members traded positively in quarter two, behind this, the results of the latest QES survey indicate a crystallisation of the many challenges that they are currently facing,” Ann McGregor, NI Chamber chief executive, said.
“The reported slow-down in demand is a concerning indicator and while we might expect that there would be some slow down after the relatively strong rebound for many after Covid, businesses are now facing an entirely different set of challenges which have been largely unanticipated.”
And Brian Murphy, managing partner, BDO NI said: “Despite the uncertainties created in recent years by Covid and Brexit, 82% of last quarter’s respondents have reported that they are trading positively, post pandemic, with 70% having also adapted to the post EU trading procedures. Considering the scale of the challenges, this is an incredible result and certainly tells me that businesses in Northern Ireland have been making the most of the good days.
“Unfortunately, the positive momentum that has been building in the economy will be very much needed to mitigate the cost of living and the cost of doing business that are taking their toll on many, with 72% of firms expressing concerns about cashflow and the impact of rising costs on the bottom line and 79% of those businesses expecting to have to raise prices as a result.”