No silver bullet that will secure recovery

For businesses in Northern Ireland, the Chancellor’s Winter Economy Plan provided some measured relief after another challenging few months.

With the economy only just springing back into action over the summer, the announcement of further lockdown restrictions from the end of September came as a real blow for businesses and individuals. Further news of localised restrictions in the North West are also concern and perhaps provide an unwelcome signal of what lies ahead.

With friends and family no longer able to meet indoors and a curfew imposed on the hospitality sector, the new measures needed to be met with a significant policy response. Fortunately, in the form of the Winter Economy Plan, they were. The biggest relief to businesses was clearly the announcement of a successor to the hugely successful Jobs Retention Scheme. Furlough has undoubtedly saved millions of jobs across the UK, but with a cliff edge looming as the scheme was set to be wound-up, anxiety among businesses was increasing rapidly.

When coupled with an expansive offer that included extending Bounce-back loans, keeping VAT at 5% for the hospitality sector, and more besides, the UK Government must be commended for taking decisive action. Loan extensions will bring huge relief to businesses facing a cashflow crisis as they head into winter.

While the package represented a bold offer from the Chancellor, we must remain realistic. The hard truth is that it will not save every job – not in Northern Ireland, nor elsewhere. This is not a like-for-like replacement for furlough and some jobs will undoubtedly fall through the cracks. As redundancies start to rise, they must be matched with a significant investment in upskilling and retraining to stave off the risk of long-term joblessness. Northern Ireland knows only too well how scarring that can be, with memories of double-digit unemployment still in the minds of anyone who lived through the 1980s.

There is also an awareness that the measures won’t protect every sector. Some extremely viable businesses will remain under extreme pressure until demand returns to something like normal. The hospitality sector has been particularly – and rightly – vocal in recent days. Hospitality in Northern Ireland is second to none. From bustling bars and cafés to award winning restaurants, we have a fantastic offering that is second to none. But if we want them to weather this storm and be there to offer a welcome pint or hot meal to both locals and tourists when the pandemic is over, we need to act now.

Similarly, with the global aircraft fleet mostly grounded by the pandemic and day-to-day uncertainty over international travel restrictions, the aerospace industry has been hit hard. With a supply chain that stretches across the region, aerospace is a jewel in the crown of Northern Ireland’s manufacturing sector. Decades of honed experience and expertise have grown the sector to around 10,000 jobs. Unfortunately, the impact of the pandemic has been swift and severe – with 2,000 redundancies and around 3,000 sector workers put on furlough.

As we seek to tackle the challenges of the coming weeks and months head-on, we recognise there is no silver bullet that will secure our recovery. Instead we have a series of policy levers, each with the capacity to move us forward an important step. The Chancellor is using those at his disposal, and we must encourage Stormont to be creative in its response over the months and years ahead.

Next in line is securing an all-important agreement with the EU that will minimise costs and red tape, keep our businesses competitive and free up resources to overcome difficulties ahead.

The size of the prize for securing a deal is real. For starters, it would protect jobs under pressure from the pandemic via duty and quota free trade. Meanwhile closer customs cooperation would help to minimise red tape and costs, allowing firms to invest productively. And importantly, it would also ease the implementation of the Northern Ireland Protocol.

There’s no doubt that these challenges are stark, an unprecedented hat-trick of rebuilding from the first wave of coronavirus, dealing with the resurgence of the virus and preparing for significant changes to the UK’s trading relationship with the EU. Each would be difficult individually, but facing all at once, they feel like an enormous mountain to climb.

While huge strides have already been taken to soften the impact of the pandemic on the UK economy, there’s no doubt that more may be needed. Particularly if we want to protect those industries like aerospace and hospitality that are so essential to Northern Ireland. It’s time for the UK Government and NI Executive to work together, roll-up their sleeves and do everything they can to protect lives and livelihoods at this critical moment.

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