Growth of NI businesses in 2023 is expected to slow significantly

A major survey from Enterprise Northern Ireland has found that nearly half of micro and small businesses could face closure in 2023 without proper government support.

Over 600 businesses from across NI and across all economic sectors responded to the NI Enterprise Barometer, the largest annual survey of micro and small businesses. The Barometer captures data, opinions, needs, and proposed solutions of local small, micro, and self-employed businesses.

47% of respondents stated that they will not survive the next 12 months without the right support in place, while 95% of businesses reported that their utilities and fuel costs have risen sharply throughout 2022. One in 10 businesses are now also reporting severe cash flow pressures, up from just 3% at the beginning of this year.

The latest data also shows that economic growth is now slowing, with only 36% of businesses expecting to grow in 2023, compared to over 50% at the beginning of 2022. More significantly and worryingly, the number of respondents who expect their business to contract in the next year has doubled from 18% to 36%.

Supported by Ulster Bank and the British Business Bank, this year’s Barometer sought to gauge the experience of small and micro businesses during the cost-of-living and cost-of-doing-business crises, as well as their plans for the year ahead.

Michael McQuillan, Enterprise NI chief executive, said: “The 2022 NI Enterprise Barometer presents a concerning snapshot of our local economy. As illustrated in these results, the current economic and fiscal environment is extremely challenging for small and micro businesses across NI.

"Macro-level events and challenges like the war in Ukraine and the global economic downturn are placing serious pressures on local businesses, combined with political instability and uncertainty over post-Brexit funding.

“While not surprising, 95% of businesses experiencing a rise in their utilities and fuel expenses over the past 12 months is a stark figure and one which drives home the gravity of the situation businesses find themselves in. The rising cost-of-doing-business is having a severe impact on our entrepreneurs. Without action in the coming weeks and months, businesses will go to the wall.

“Nearly half of our respondents have said they will not survive in the medium term without government support. Small and micro businesses make up the vast bulk of the economy. The collapse of nearly half of these firms would have a catastrophic knock-on effect on the Northern Irish economy, communities, families, and households across the country.

“Respondents to the Barometer have been clear on the interventions and support they believe are necessary over the next 12 months. These include a reduction in VAT, a change to the business rates system to reduce the burden on small businesses, greater access to finance for stability and growth, and lowering of the energy cap. In the absence of an Executive at Stormont, it’s crucial that the UK Government now steps in to protect the backbone of the NI economy and protect businesses, jobs, and households.”

Maureen O’Reilly, Barometer economist, added: “While last week’s Autumn Statement from the Chancellor was aimed at injecting stability into the economy once more, it did little to relieve the concerns of small and micro business owners in NI.”