Business Confidence Holds Up Despite Significant Cost Pressures
Christopher Morrow, Head of Communications and Policy at NI Chamber and Brian Murphy, Managing Partner at BDO NI pictured at the launch of the latest Quarterly Economic Survey (QES).
• All key economic indicators positive in Q4 21, signaling improving trading conditions • 70% of NI Chamber members expect their business to grow in 2022 • More businesses are reporting increased UK sales (35%) in the last three months compared to those reporting falling sales (18%) • 74% expect to raise prices in the next three months – the highest figure on record • 72% are trying to recruit, with 86% facing recruitment difficulties Most businesses in Northern Ireland expect to grow in 2022, according to the findings of the latest Quarterly Economic Survey (QES) published by NI Chamber and BDO NI. However, inflationary pressures from mounting business costs including high raw material costs and pressure to raise wages caused significant concern during Q4 2021, particularly for manufacturers. Expectations to raise prices are the highest on record, with a greater share of businesses in Northern Ireland
expecting to raise prices in the next three months compared to all other UK regions. The share of businesses operating at full capacity rose to 45% in Q4 21 (39% in Q3 21) for manufacturing and 50% for services (47% in Q3 21), although over half of businesses are still operating below capacity. Brexit and the NI Protocol In the Q4 21 survey, firms were asked about the overall impact of EU exit on business performance over the last year. 23% of firms said it had a major negative impact on business, 39% a minor negative impact, with 21% stating it has had no impact to date. There has been a minor positive impact for 7% of businesses and a major positive impact for 3%. Businesses were also asked how they have adjusted to new trading arrangements. In Q4 21, 57% said that they had adapted to the new trading arrangements (compared to 45% in Q3 21, 44% in Q2 21 and 15% in Q1 21). There is a core of around 15% of businesses that are finding the new trading arrangements extremely challenging (13% Q3 21). In terms of resolving issues that have
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emerged with the NI Protocol, 39% of members believe that these issues can be resolved in the next year, while 31% do not believe that they can within that time frame. Prospects for 2022 The outlook for business and the economy for 2022 is much more positive than has been the case in recent years. 58% of members believe the Northern Ireland economy will grow in 2022, up from just 19% for 2021. However, there is still quite a sizeable minority, 1 in 4 (24%), who believe that the Northern Ireland economy will contract in 2022. Businesses are particularly optimistic around their own prospects, albeit that for some businesses this is coming from a particularly challenging trading position in the last two years. 70% believe their business will grow in 2022, up from 44% in 2021. In fact, 12% believe that their business will grow strongly this year. However, 1 in 7 (14%) believe that their business will contract in 2022. Only 1% believe their business will decline strongly, the lowest recorded figure since prospects were first recorded in 2017.
