Report reveals economy shows tentative signs of starting to turn a corner
InterTradeIreland’s latest Business Monitor shows a degree of cautious optimism from business owners in both Northern Ireland and the Republic of Ireland.
As the wider economy grapples with the impact of Covid-19 and the end of the Brexit transition period, 63% of firms surveyed said they are in stable or growth mode. This is compared to just under half in the previous quarter.
The full resumption of economic activity for just over half of firms, including three in four professional service companies and 66% of cross-border traders, has contributed to a sense that the economy is travelling in the right direction.
Kerry Curran, InterTradeIreland’s Acting Director of Strategy and Policy, said: “We have been continuously impressed by businesses’ resilience in the face of extremely challenging circumstances. While we welcome some signals that the economic outlook is starting to look a bit brighter - the nascent recovery looks uneven across sectors, as leisure and hospitality continue to be hampered by the impact of Covid-19. Overall, businesses and consumer confidence is less of an issue this quarter, with restrictions related to the pandemic starting to be rolled back.
“What is an extremely encouraging sign is that companies are preparing for growth, with over half of firms planning to invest in the year ahead. Over a third of businesses intend to spend on marketing and over a quarter in digital and new technologies – this is also likely to be in response to Covid-19.
“Almost 20% of firms plan to invest in R & D during 2021, which will be highly advantageous as they seek to remain competitive. This rises to 42% of cross-border traders, showing once again the strategic outlook of companies that trade cross-border which has led to consistently higher productivity, profits and sales despite the uncertainty of the pandemic and Brexit.”
The ability to remain competitive and the impact of rising costs is still high up the agenda for businesses. Costs are particularly challenging for the manufacturing sector (63%), construction (55%) and retail (59%). Businesses in NI are also 25% more likely to cite rising costs as an issue compared to ROI.
Another increasing concern is the impact of Brexit, with the retail and the manufacturing sectors most worried. Over half of firms in Northern Ireland are concerned about the out workings of Brexit, versus 41% in RoI. However, as a significant proportion of firms are not operational yet, the entire impact of the challenges and opportunities of the end of the transition period may not yet be clear.
Employment levels have stabilised with 75% of firms maintaining staffing levels. It is likely these employment levels may fluctuate in the second half of the year as government supports and furlough schemes may scale back.
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