Quarterly Economic Survey Q3 2023

Whilst the trading environment continues to be largely positive for businesses, there are signs of some challenges. A new report from Northern Ireland Chamber of Commerce and Industry (NI Chamber) and BDO NI found that in Q3 23, more businesses were operating below capacity, confidence has taken a slight knock and less recruitment is taking place. Price pressures are easing but inflation remains a very significant concern, with labour costs dominating pressures to raise prices.

Brian Murphy, BDO NI Managing Partner, remarked,

“There is much to welcome in the latest QES results, notably that 77% of responding businesses are performing well, with positive balances also recorded for expected growth in turnover and profitability. Although local businesses are still facing the threat of inflation, greater energy costs and increasing labour costs, it is important to reflect on how far we have come over the last three years and not just the last three months.

“Over this period local firms have experienced the worst of the pandemic, the uncertainty around Brexit and the NI Protocol, the cost of living and doing business crisis, the lack of a local Executive and, of course, rising inflation. That local businesses are performing as they are, is a testament not only to their resilience but also to their willingness and ability to adapt. With 81% of local firms identifying as being innovative, this will no doubt be one of the main reasons why business performance in Northern Ireland has been so strong.

“In the aftermath of the UK’s mini-budget last autumn and the period of economic instability that followed, it would have been unimaginable at the time to think that we would be reporting such momentum in the local business community. Of course, the challenges remain, however with the QES reporting that the pressures of utility and fuel costs are easing, and the threat of inflation is not as great as it was twelve months ago, there are grounds for optimism.

“One area where NI is leading the way is cashflow – the life blood of all businesses. Local firms are now reporting stronger cash reserves than at any point since Q1 2015 – nearly a decade ago – and crucially it is the first time since 2018 that we have been able to report positive cashflow balances for two consecutive quarters. This is encouraging and again illustrates that by managing cashflows and embracing innovation, businesses in Northern Ireland know how to manage uncertainty and to plan for the future.

“With over 70% of firms recruiting, it is still concerning that 84% of services and 80% of manufacturing businesses are reporting difficulties in finding suitable candidates to fill these roles, with many companies operating at below capacity.

The greatest concern for businesses is the absence of an NI Executive. We need Ministers in place to address the skills shortage, to provide clarity around the Windsor Framework, to support investment and above all to take the decisions necessary to let our local businesses continue to grow and thrive.

“Businesses have been able to deliver positivity in the absence of Ministers, but a restoration of the institutions would bring the stability, decision-making and accountability needed to allow for greater private sector investment and growth, enabling Northern Ireland to truly fulfil its potential and become an economic powerhouse on these islands.”

Download the report below to read the full survey results.