As the days are getting longer and with the weather starting to improve at last, it’s encouraging to see that business confidence remains strong in Northern Ireland, in fact there is even an increasing view that better days lie ahead. It’s been a long time since we’ve seen such positive momentum and sentiment from Northern Ireland businesses, and it is great to see it. Although local companies still have challenges to face, it is greatly encouraging that we are seeing a level of consistency in positive sentiment across all sectors.
The improvement in performance across key indicators for both the manufacturing and services sector, alongside improved confidence (60% compared to 47% in Q2 of 2022), demonstrates that the local business community is showing at optimism for future growth.
The survey highlights that 4 in 5 businesses are trading either well or reasonably well, this is particularly notable given they continue to operate against the testing backdrop of increasing energy costs, rising inflation, rising labour costs and barriers to recruitment.
Within manufacturing, Northern Ireland businesses are performing above the UK average across the majority of key indicators, with a particularly good quarter in terms of export sales. Confidence regarding turnover and profitability for the next 12 months is also improving. The recent ‘Full Capital Expensing’ policy announced by the UK Chancellor, which will allow businesses in manufacturing to invest in plant and machinery whilst accessing immediate 100% tax, should support the sector further.
Looking at what businesses see as the key areas that could unlock growth in Northern Ireland, it is not surprising that an agreement on the NI Protocol tops the wish list, with 63% of members believing this could have the biggest positive impact on growth.
For Northern Ireland businesses to continue to compete there is an urgent need for investment in people and skills, this will facilitate access to a diverse and skilled workforce, which is clearly in demand. Such investment would play a key role in boosting productivity across the economy and as a result, unlocking our future growth potential.
Businesses continue to acknowledge the need to lower corporation tax, which as of the 1st of April is double that of our neighbours in the Republic of Ireland who operate with just 12.5% compared to our 25%.
The impact of the pandemic is still being felt by many businesses, in particular in how they are managing their debt. Whilst there is still a significant number of organisations with at least some concern in how they can maintain debt repayments, it is notable that over 47% are currently debt free, a significant achievement in this climate.
Turning this confidence and investment intent into further sustainable growth will be determined by a range of factors, some of which are beyond the control of the business community. What this survey shows is that companies across sectors continue to look for opportunities to invest, innovate and grow and if decisions on key policy areas are taken to facilitate this, then our longer days will become the better days we know they can be.
In total, 243 members responded to the NI Chamber of Commerce & Industry Quarterly Economic Survey (QES), in partnership with BDO, for the 1st quarter of 2023. Together they account for 37,000 employees in Northern Ireland. The fieldwork for the Quarter 1 of 2023 survey took place between 21 February and 9 March 2023. The Windsor Framework was announced on 21 February.