Brexit vote overshadowed a busy year for North’s business

From the latest political upheavals at Stormont to constant job fears at one of the North's largest private sector employers, a slew of sell-offs and the never-ending debate over Brexit, 2016 has made quite an impact on the Northern Ireland economy.

This time last year the North’s economy was looking decided rosy – PWC NI was predicting growth rates of about 1.4 per cent for 2016 and for a while it all looked good. Consumer confidence was strong, businesses were upbeat, unemployment fell and there was a jump in the total number of people in work.

But as the UK's referendum on leaving the EU grew ever closer, everything began to wobble. And by August, as the dust settled after the exit vote, the NI Chamber revealed that one in four local firms in the North had revised plans for their business as a result. Locally, 55.8 per cent of people voted to remain, and the majority of firms said they were likely to pause or freeze growth, investment and recruitment plans.

According to Richard Ramsey, chief economist Northern Ireland with Ulster Bank, its monthly PMI reports highlighted that the first three quarters of 2016 saw a "deceleration in growth" in the private sector, while the biggest impact of the Brexit vote locally was the depreciation in sterling.

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A year in two parts

In one sense the performance of the North’s economy during the past 12 months can be viewed in two parts – before and after the EU referendum.

Angela McGowan, who became the Northern Ireland director of the CBI (Confederation of British Industry) this year, points out that after June 23rd it began to “feel like the odds were being stacked against the Northern Ireland business community, with the EU referendum result delivering an unprecedented level of uncertainty around future trade and access to skills.”

“Many companies in the North operate an all-island business model and worry about how this will be impacted when the UK withdraws from the EU.

“Trade worries are further down the line, but in 2016 firms faced a very immediate impact of the UK’s referendum – the impact on sterling. CBI surveys showed that the drop in the value of sterling caused problems for around 47 per cent of firms in the latter part of the year as input prices shot up. Estimates of producer price inflation from the Office of National Statistics show rises of 12.2 per cent in the year to October,” McGowan said.

Overall, Prof Neil Gibson, director of Ulster University's Economic Policy Centre believes the impact of the EU referendum in the North over the past six months has not been as significant as some forecast. Exporters have enjoyed a boost from the weakness of sterling, as have retailers thanks to the power of cross-border shopping.

Gibson also believes the North’s economy performed well against the UK’s during 2016, in particular in relation to the local labour market.

“The economic jobs data for Northern Ireland this year has been very positive, with local jobs growth of 3.3 per cent in the 12 months to September 2016, well ahead of the UK average of just 1.3 per cent over the same time period,” he said.

Jobs uncertainty

But there are negatives in the jobs market. Uncertainty hangs over the future of job numbers at one of the North's biggest private sector employers – Bombardier Aerospace.

During 2016 Bombardier brought forward a redundancy programme to axe 1,080 jobs in the North. It also announced two months ago that it plans to make a further 7,500 of its current workforce redundant, although there is no timeframe or any disclosed details yet on how its Northern Ireland operations may be affected by this.

Next door to Bombardier in east Belfast there is also a question mark about what plans the new owners of George Best Belfast City Airport, the venture capital company 3i, might have for it in 2017.

Belfast City Airport was the last big corporate deal of 2016 during a busy year which included high-profile sell-offs such as Toomebridge-based SDC Trailers and Portadown-based Thompson Aero Seating – which provided the new lie-flat beds for Aer Lingus. They were both acquired by Chinese owners.

Takeover deals

The past 12 months also saw one of the biggest deals to date in the North – the sale of the Northern Ireland-incorporated Hampden Group, which traded as Homebase, to Australian organisation Wesfarmers for £340 million (€400 million).

It also saw the takeover of some of the North's best entrepreneurial startups by larger rivals including Belfast's PathXL to Philips and Ballyclare-based Chain Reaction Cycles to its chief competitor Wiggle.

But when it comes to sentiment, probably the deal that tops them all for 2016 was the final sign-off from Belfast-based UTV, which had been broadcasting since August 1959, as approval was granted for ITV’s £100 million takeover of its television assets.