Cost of doing business in Northern Ireland remains ‘real concern’

The cost of doing business in Northern Ireland and real concerns about a potential UK interest rate rise is making some local firms think twice about investing in their future, a new survey suggests today.

The latest Quarterly Economic Survey (QES) from the Northern Ireland Chamber of Commerce and Industry, produced with business advisors BDO, shows while there is some stabilisation in the local economy there is "no consistent pattern of growth".

Ann McGregor, NI chamber chief executive said it is obvious from the survey, which included 350 local businesses, that the recovery not only has some way to go but there are also signs that some sectors are experiencing another drop in performance.

“The most concerning results this quarter are for the services sector and the survey suggests that its performance has been weakening over the last year. There have been some positives around the manufacturing sector particularly in terms of taking on people and it is encouraging that export sales and orders have improved slightly.

“But the sector still faces challenges and this is reflected in the devastating announcement of the Gallaher closure last week. Overall the results show that the environment is still challenging for Northern Ireland businesses and the emphasis needs to be on helping business here stabilise and grow,” Ms McGregor said.

The chamber says competition remains a key concern for firms who have reported that each quarter the competitive environment becomes more challenging.

Many businesses also expressed concerns about exchange rates and how the strength of sterling is impact on their competitive advantage.

They say that anything that impacts on the cost of doing business - from salary costs to energy costs could hamper future investment plans.

The survey shows that three out of every four firms in the North, particularly construction, retail and wholesale, are worried about the direct impact on their operations of any potential UK interest rate hike.

Around half of local businesses also believe that Northern Ireland households are more indebted than the rest of the UK and 40 per cent believe businesses here are more indebted.

Laura Jackson, BDO partner, said overall the survey shows that while there is a degree of stabilisation in some sectors the North is "not yet in the throes of a sustainable all embracing economic recovery".