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Northern Ireland’s economic activity has fallen for the first time in six months and the outlook remains overshadowed by political crisis, according to a closely watched survey.
Faltering demand and market uncertainty pushed business activity in the Ulster Bank Northern Ireland Purchasing Managers’ Index down to 48.2 in July from 52.5 in June, indicating that a majority of businesses reported a decline.
“Just like the summer weather, business conditions took a turn for the worse in July,” said Richard Ramsey, chief economist for Northern Ireland at Ulster Bank.
“Following a notable softening in new orders during the second quarter, local businesses started the third quarter with activity falling for the first time in six months,” Ramsey said.
He added that the “dark cloud of no Stormont executive looks set to remain anchored over the economy for the foreseeable future”.
Northern Ireland has been without a power-sharing executive or assembly at Stormont since regional elections in May last year because of a boycott by the largest pro-UK party in a row over post-Brexit trade arrangements.
Despite the downbeat business activity news the UK government said a major investment conference next month would provide the “rocket fuel” for business expansion.
It announced on Sunday that 100 investors from the US, Middle East, Europe and Asia Pacific had confirmed attendance at a Northern Ireland Investment Summit on September 12-13 to showcase the region’s unique post-Brexit access to both the UK and EU.
“This September’s investment summit will provide the rocket fuel for Northern Ireland businesses to launch into new frontiers across technology, finance and more,” said Lord Dominic Johnson, UK investment minister.
Despite the decline in business activity, local businesses echoed his enthusiasm, with the PMI survey showing sentiment at a three-month high.
Already the UK’s second biggest tech hub outside London, Northern Ireland attracted £19.2bn in inward investment in 2021, according to the Department for Business and Trade. Officials are hoping that US companies will pile in too. Washington’s economic envoy, Joe Kennedy III, is due to attend the summit and will also lead a trade delegation to the region on October 24.
However, Kennedy says US businesses want to see stable government restored in order to invest and few politicians are willing to bet that the executive will be functioning by next month.
The Democratic Unionist party is refusing to return to Stormont until London provides guarantees that the region’s place in the UK and ability to trade with Britain are safe.
It is unconvinced by the Windsor framework agreed by London and Brussels earlier this year, which was designed to slash onerous customs paperwork originally agreed as part of the UK’s exit from the bloc.
One key change — a fast-track green lane for goods staying in Northern Ireland and a red lane, with customs checks, for those entering from Britain and travelling on into the EU — will start being phased in from October.
But Queen’s University Belfast experts David Phinnemore and Lisa Claire Whitten warned that the green lane will not, in fact, be totally check-free and “only time and implementation will reveal . . . whether the ‘green lane’ lives up to the UK government’s initial sales pitch”.
