15 minute read
Quarterly Economic Survey
Cause For Optimism as NI’s
• Business confidence improved strongly in
Q2 2021 • More businesses are now making plans to invest, particularly manufacturers • 67% believe that NI’s status post-Brexit presents opportunities for the region • 34% saw an increase in domestic (UK) sales in Q2 2021 • 62% of businesses are trying to recruit • 62% of manufacturers and 57% of services are feeling pressure to raise prices
Northern Ireland’s economic recovery strengthened during Q2 2021 with signs of confidence returning to both the manufacturing and services sectors, according to the latest Quarterly Economic Survey from NI Chamber and BDO. The summer report showed that one year since the pandemic struck, most key indicators around domestic sales, exports and jobs have continued to show signs of improvement from their historic low in Q2 2020.
Confidence and investment intentions
More businesses are now making plans to invest, particularly manufacturers. In Q2 2021, the investment in plant and machinery balance was +16% for manufacturing and +6% for services. This compares to a series low last year of –52% for manufacturing and –62% for services. Intentions to invest in training have also improved, with balances of +26% for manufacturing and +10% for services in Q2 2021.
Rising prices
Price pressures came to the fore during the first quarter of 2021 and have been magnified during Q2. In fact, the survey findings indicate that expectations to raise prices are currently the highest on record. 62% of manufacturers and 57% of service businesses who responded to this survey are feeling pressure to raise prices.
Recruitment
Recruitment activity continued to improve in Q2 2021, now surpassing pre-COVID levels. In Q2 2021, 62% of businesses said they were trying to recruit. This is compared to just 21% of service businesses and 27% of manufacturers in Q2 2020.
Trade
During Q2, 29% of members said that their business has adapted well to new trading arrangements, up from 15% in Q1. Almost a third (32%) are finding new trading arrangements difficult, compared to 41% in Q1.There is a core of around 15% of businesses who are finding the new trading arrangements very challenging.
The findings show that new arrangements have had a negative impact on trade for some businesses. Twenty-four per cent of members stated that the new arrangements have had a major negative impact on trade with Great Britain, up from 18% in Q1. In general, the impact on trade with other jurisdictions – including the Republic of Ireland and the rest of the world – has been more negative than positive, although around 25% of members say that the new trading arrangements have positively impacted on trade within Northern Ireland.
Two in three members (67%) believe that Northern Ireland’s unique status post-Brexit presents opportunities for the region, and 47% believe that Northern Ireland’s trading status will present opportunities for their business going forward. These figures reflect very similar views in the Q1 2021 survey.
Ann McGregor, Brian Murphy and Christopher Morrow.
Commenting on the findings, Ann McGregor, Chief Executive of NI Chamber, said:
“Our survey findings confirm that Northern Ireland’s economic recovery is gaining momentum and, while it is good to see, we must be mindful that it is coming from a very low base. Businesses are also facing significant pressure to raise prices for a variety of reasons including raw material cost increases, bottlenecks in supply chains caused by COVID-19, as well as cost and administrative burdens arising from new trading arrangements. There is a danger of persistent inflation, which is bad for businesses and consumers. However, we hope these price pressures will be a largely temporary phenomenon as some sense of normality returns after the extreme challenges of the last year and a half.
“Brexit has been challenging for a number of firms but the outlook appears to be improving, with more companies reporting that they are adapting. Any change of trading arrangements of this magnitude will inevitably present issues during transition. However, this survey shows that, ultimately, businesses see the benefits of Northern Ireland’s unique position. They now need the support of a stable government to capitalise on the opportunities we now have to trade with other countries, which should be central to our growth strategy.”
Ann McGregor, Chief Executive of NI Chamber.
Economic Recovery Gathers Pace
ANALYSIS
BY BRIAN MURPHY, MANAGING PARTNER, BDO NORTHERN IRELAND
I am delighted to see that the latest Quarterly Economic Survey is showing real signs of positivity and confidence in our economic future. There’s no doubt that there are still concerns within the business community, but for the first time in many months, these are outweighed by the building momentum of the recovery.
We must always remember that what we have experienced over the last year has not been a “market failure”, it has been driven by a most dreadful pandemic. As the restrictions have eased, the economy has been able to restart and, in many cases, this restart has been on a better footing than before.
More businesses are now reporting increased UK sales (34%) in the last three months compared to those where sales are falling (24%). Confidence is returning and even investment prospects indicators, which had been particularly badly hit, are now positive. The share of businesses operating at full capacity has almost doubled to 44% for manufacturing and the service industry has increased by circa 25%. These results are all hugely encouraging.
It is concerning of course that many businesses still do fear the risk of closure, however it is encouraging that these numbers are reducing as more businesses begin to find their feet.
Brexit and the Protocol remain issues of concern, although it is positive that 67% of businesses feel that Northern Ireland’s special status provides us with opportunities. Furthermore, around half believe it will positively impact their business. That said, respondents are concerned about the impact of the Protocol on NI’s trading reputation with GB (89%) and internationally (87%).
With the building levels of confidence and optimism that we are seeing in this quarter’s results, it is now more important than ever that we communicate to the wider world what has been achieved here and why international businesses should invest in NI. We have an amazing product to offer and we need to share the story of our achievements with the rest of the world.
Whilst these results do show light at the end of the tunnel, it is important that our local decision makers in the NI Executive continue to listen to the concerns of the business community who are at the coal face of dealing with the disruption of COVID-19 and Brexit. Throughout the pandemic we have seen how important it is to have the Executive in place. Our Ministers have worked hard and they have listened to the business community. Recent announcements such as the investment of £180m in new traineeships, the launch of the NIDAKS scheme for aviation and the review of licensing laws will certainly provide a helping hand to our economy. These examples alone demonstrate the need for our Executive and how it listens to the business community. We urge them to continue to listen and to act, although we are seeing some rays of light, we aren’t quite out of the woods yet. Quarterly Economic Survey
Q2 2021 northernirelandchamber.com
Business Performance
Breakdown & Sector Performance
More businesses now reporting increased UK sales (34%) in last 3 months compared to those where sales have been falling (24%) 63% are trying to recruit albeit 70% are experiencing recruitment difficulties
In manufacturing, sales and order books are strengthening with a renewed confidence in turnover expectations and more manufacturers operating at full capacity (44%)
In services, the trading position has improved but remains weak, particularly in a
UK context, although recruitment intentions are improving
Brexit Watch
45% are adapting to the new trading arrangements but 32% are still finding them challenging 56% are incurring increased costs following the new trading arrangement 47% believe Northern Ireland’s different status following EU Exit presents 20% say that they have lost turnover opportunities for their own business and 17% have lost customers
Fieldwork for the NI Chamber & BDO QES took place from 20 May to 7 June 2021. Over 200 members responded to survey during the 2nd quarter of 2021, accounting for almost 23,000 jobs Note: The ‘balance’ refers to the difference between the % of firms reporting an increase in a key indicator minus the % reporting a decrease.
Quarterly Economic Survey
Q2 2021 northernirelandchamber.com
Business Performance
Breakdown & Sector Performance
More businesses now reporting increased UK sales (34%) in last 3 months compared to those where sales have been falling (24%) 63% are trying to recruit albeit 70% are experiencing recruitment difficulties
In manufacturing, sales and order books are strengthening with a renewed confidence in turnover expectations and more manufacturers operating at full capacity (44%)
In services, the trading position has improved but remains weak, particularly in a
UK context, although recruitment intentions are improving
COVID-19 Impact 59% have traded well/reasonably during the pandemic 32% have been negatively impacted but are seeing some signs of improvement 7% are seeing no signs of improvement, down from 14% in Q1 21 38% see COVID is a bigger concern than EU Exit, 24% see EU Exit as a bigger concern Brexit Watch
45% are adapting to the new trading arrangements but 32% are still finding them challenging 2021 67% believe there are opportunities for NI 56% are incurring increased costs following the new trading arrangement 47% believe Northern Ireland’s different status following EU Exit presents 20% say that they have lost turnover opportunities for their own business and 17% have lost customers
Fieldwork for the NI Chamber & BDO QES took place from 20 May to 7 June 2021. Over 200 members responded to survey during the 2nd quarter of 2021, accounting for almost 23,000 jobs Note: The ‘balance’ refers to the difference between the % of firms reporting an increase in a key indicator minus the % reporting a decrease.
Quarterly Economic Survey
Q2 2021 northernirelandchamber.com
Business Performance
Breakdown & Sector Performance
More businesses now reporting increased UK sales (34%) in last 3 months compared to those where sales have been falling (24%) 63% are trying to recruit albeit 70% are experiencing recruitment difficulties
In manufacturing, sales and order books are strengthening with a renewed confidence in turnover expectations and more manufacturers operating at full capacity (44%)
In services, the trading position has improved but remains weak, particularly in a
UK context, although recruitment intentions are improving
COVID-19 Impact 59% have traded well/reasonably during the pandemic 32% have been negatively impacted but are seeing some signs of improvement 7% are seeing no signs of improvement, down from 14% in Q1 21 38% see COVID is a bigger concern than EU Exit, 24% see EU Exit as a bigger concern Brexit Watch
45% are adapting to the new trading arrangements but 32% are still finding them challenging 2021 67% believe there are opportunities for NI 56% are incurring increased costs following the new trading arrangement 47% believe Northern Ireland’s different status following EU Exit presents 20% say that they have lost turnover opportunities for their own business and 17% have lost customers
Fieldwork for the NI Chamber & BDO QES took place from 20 May to 7 June 2021. Over 200 members responded to survey during the 2nd quarter of 2021, accounting for almost 23,000 jobs Note: The ‘balance’ refers to the difference between the % of firms reporting an increase in a key indicator minus the % reporting a decrease.
Quarterly Economic Survey
Q2 2021 northernirelandchamber.com
Business Performance
Breakdown & Sector Performance
More businesses now reporting increased UK sales (34%) in last 3 months compared to those where sales have been falling (24%) 63% are trying to recruit albeit 70% are experiencing recruitment difficulties
In manufacturing, sales and order books are strengthening with a renewed confidence in turnover expectations and more manufacturers operating at full capacity (44%)
In services, the trading position has improved but remains weak, particularly in a
UK context, although recruitment intentions are improving
COVID-19 Impact 59% have traded well/reasonably during the pandemic 32% have been negatively impacted but are seeing some signs of improvement 7% are seeing no signs of improvement, down from 14% in Q1 21 38% see COVID is a bigger concern than EU Exit, 24% see EU Exit as a bigger concern Brexit Watch
45% are adapting to the new trading arrangements but 32% are still finding them challenging 2021 67% believe there are opportunities for NI 56% are incurring increased costs following the new trading arrangement 47% believe Northern Ireland’s different status following EU Exit presents 20% say that they have lost turnover opportunities for their own business and 17% have lost customers
Fieldwork for the NI Chamber & BDO QES took place from 20 May to 7 June 2021. Over 200 members responded to survey during the 2nd quarter of 2021, accounting for almost 23,000 jobs Note: The ‘balance’ refers to the difference between the % of firms reporting an increase in a key indicator minus the % reporting a decrease.
Quarterly Economic Survey
Q2 2021 northernirelandchamber.com
Business Performance
Breakdown & Sector Performance
More businesses now reporting increased UK sales (34%) in last 3 months compared to those where sales have been falling (24%) 63% are trying to recruit albeit 70% are experiencing recruitment difficulties
In manufacturing, sales and order books are strengthening with a renewed confidence in turnover expectations and more manufacturers operating at full capacity (44%)
In services, the trading position has improved but remains weak, particularly in a
UK context, although recruitment intentions are improving
COVID-19 Impact 59% have traded well/reasonably during the pandemic 32% have been negatively impacted but are seeing some signs of improvement 7% are seeing no signs of improvement, down from 14% in Q1 21 38% see COVID is a bigger concern than EU Exit, 24% see EU Exit as a bigger concern Brexit Watch
45% are adapting to the new trading arrangements but 32% are still finding them challenging 2021 67% believe there are opportunities for NI 56% are incurring increased costs following the new trading arrangement 47% believe Northern Ireland’s different status following EU Exit presents 20% say that they have lost turnover opportunities for their own business and 17% have lost customers
Fieldwork for the NI Chamber & BDO QES took place from 20 May to 7 June 2021. Over 200 members responded to survey during the 2nd quarter of 2021, accounting for almost 23,000 jobs Note: The ‘balance’ refers to the difference between the % of firms reporting an increase in a key indicator minus the % reporting a decrease.
Quarterly Economic Survey
Q2 2021 northernirelandchamber.com
Business Performance
Breakdown & Sector Performance
More businesses now reporting increased UK sales (34%) in last 3 months compared to those where sales have been falling (24%) 63% are trying to recruit albeit 70% are experiencing recruitment difficulties
In manufacturing, sales and order books are strengthening with a renewed confidence in turnover expectations and more manufacturers operating at full capacity (44%)
In services, the trading position has improved but remains weak, particularly in a
UK context, although recruitment intentions are improving
COVID-19 Impact 59% have traded well/reasonably during the pandemicBrexit Watch
32% have been negatively impacted but are seeing some signs of improvement 7% are seeing no signs of improvement, down from 14% in Q1 21 45% are adapting to the new trading arrangements but 32% are still 38% see COVID is a bigger concern than EU Exit, 24% see EU Exit as a bigger concernfinding them challenging 56% are incurring increased costs following the new trading arrangement 47% believe Northern Ireland’s different status following EU Exit presents 20% say that they have lost turnover and 17% have lost customers 2021 67% believe there are opportunities for NI opportunities for their own business
Fieldwork for the NI Chamber & BDO QES took place from 20 May to 7 June 2021. Over 200 members responded to survey during the 2nd quarter of 2021, accounting for almost 23,000 jobs Note: The ‘balance’ refers to the difference between the % of firms reporting an increase in a key indicator minus the % reporting a decrease.
COVID-19 Impact 59% have traded well/reasonably during the pandemic 32% have been negatively impacted but are seeing some signs of improvement 7% are seeing no signs of improvement, down from 14% in Q1 21 38% see COVID is a bigger concern than EU Exit, 24% see EU Exit as a bigger concern
2021 67% believe there are opportunities for NI
