Business confidence stable despite cost pressures

Northern Ireland businessmen are tired of political lines over the Northern Ireland Protocol and are instead looking to the future with confidence, a survey has found.

The coals surveyed by the Northern Ireland Chamber and trade advisory firm BDO NI indicated they were feeling confident about 2022, even though pressure on prices was the highest on record.

In fact, seven out of 10 members said they expect their business to grow this year, and investment intentions were the highest in five years.

But 75% indicated they would have to raise their prices during 2022, the highest figure on record.

The impetus to raise prices was the biggest for manufacturers, with 83% saying they would have to take the step.

This was a result of rising material costs, with 93% of manufacturers indicating they were feeling the stress.

Two-thirds of the service sector companies are also considering raising prices.

The survey found that inflation was a greater concern for companies in Northern Ireland than for companies in the UK as a whole.

However, most of the members were recruiting new employees, although they were having difficulty in the process.

The chamber’s 200 members were surveyed by several companies before they were affected by the emergence of the Omicron version of COVID-19.

Ann McGregor, CEO of NI Chamber, said: “It is encouraging to see that confidence remains despite the challenges, especially around pressure to raise prices.

“These quarterly Economic Survey results indicate that there is much to be optimistic about at the start of this new year.”

But she said several serious problems remained.

“We know from the members that the inflationary pressures are very intense at this point of time.

“Rising raw material costs are significant, especially for manufacturers, driven by factors including COVID-19, supply chain disruption and an exit from the European Union.

“There is also increasing pressure on businesses to raise wages.”

Businesses were also asked how they were adjusting to new business arrangements as they neared a year of operating under the NI protocol when the survey was conducted in November.

At 23%, one in four reported a major negative effect as a result of the arrangements, with 39% reporting a minor negative effect.

There has been a slight positive impact for 7% of businesses and a major positive impact for 3%.

But more than half said they had adapted to the new era, although a core of 15% found the new arrangement “extremely challenging”.

At 39%, a sizable percentage believed that protocol issues could be resolved.

However, some pointed out that they had no confidence in the UK government or the EU, and that the protocol was “too political”.

This had become a matter of political gain rather than a practical process, one member indicated, another shortcoming with the lack of direct Northern Ireland involvement in negotiating the protocol.

The survey found that overall, the politicization of the protocol had become a curse for business as it was preventing them from going ahead with it.

Ms McGregor said: “It is clear that adapting to the new trading regimes has been a challenge for many and the outstanding issues with the NI Protocol need to be resolved.

Despite this, survey responses in Q3 21 indicated that approximately 70% of our members believed that the unique trading conditions resulting from the NI Protocol presented opportunities for the sector.

“As UK and EU negotiators summarize their discussions, we urge them to come to a timely and clear agreement to give clarity and certainty to businesses and that they are beyond the cliff edge deadline.” To survive let’s build in the transition period.”

Meanwhile, at 35%, more businesses were reporting increased sales in the UK over the past three months, while 18% reported declining sales.

Brian Murphy, Managing Partner of BDO NI, said: “What a difference a year makes. It is encouraging to see that many businesses have reported increased sales, employment and investment confidence in Q4, the strongest foundation for the recovery we have seen since the start of the pandemic.

,Considering the scale of the challenges we have faced over the past two years, being in this position of strength is a true testament to the resilience, commitment and adaptability of the NI business community.”