Hurdles on way to recovery
BUSINESSES across the island of Ireland are still facing significant challenges on the path to economic recovery according to the latest survey published today by North/South business agency InterTradeIreland.
The Quarterly Business Monitor, the largest business survey on the island, reports that more than half (51%) of businesses North and South, recorded a fall in turnover in the fourth quarter of 2009.
Similar numbers of companies (48%) reported decreases in profitability - a consequence of price reductions implemented over the past six months in attempts to stimulate demand.
Among the biggest hurdles for firms to overcome are managing cash-flow and late payments but the survey presents a picture of robust attitudes among businesses about the prospects for recovery on the island.
This differs from previous quarters when business sentiment in the South was notably more pessimistic than in the North. As 2009 drew to a close, however, there was a convergence of views between firms North and South
“While, at best, businesses revealed some fragile signs of optimism in the previous quarter, this quarter’s results show that there is still great concern about current prospects for the economy,” said InterTradeIreland’s Director of Strategy, Aidan Gough.
“The results reinforce the view that recovery will be slow and uneven, with firms across the island braced for the long road ahead.”
Thirty nine per cent of those surveyed identified cash flow as the single most important issue facing their business, followed by falling demand for goods and services (24%).
Over a third of businesses (34%) also reported that their customers have asked for longer payment terms within the last year - something that larger businesses have experienced to a greater degree than smaller ones.
The cost of doing business continues to be addressed by firms, with over half (51%) citing labour costs and thirty seven per cent attributing energy costs as being their most significant competitive challenges. Given the actions already taken to reduce wage bills, particularly by firms in the South, energy (41%) is seen as the area to be tackled over the next six months.
In Northern Ireland, 42 per cent of firms reported a decline in turnover for Q4, 2009 from Q3 2009, while expectations on turnover for next quarter are more pessimistic with 18 per cent expecting decline over 17 per cent in the last quarter.
Forty per cent reported a decline in profitability up from 37 per cent in the previous quarter.
“Businesses have already taken action to meet the challenges posed by demand and costs,” added Mr Gough.
“However, real liquidity problems still remain. Rigorous working capital management will be vital for survival.”
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