A new survey has shown a worrying slump in business activity in Northern Ireland as red tape snarls up movement of goods. This is the worst downturn since May, however the overall business community is quietly confident that better times are around the corner as the vaccine roll-out continues.
Construction The Worst Hit Sector
Construction was the worst hit sector, closely followed by services, retail and then manufacturing. Some of the cost of dealing with the Brexit red tape looks like being passed on to the consumer as prices start to rise in all these sectors.
Ulster Bank chief economist Richard Ramsey is quoted in the Belfast Telegraph, saying:
“All 12 UK regions started 2021 with the sharpest deterioration in business conditions since May last year.
“Lockdown restrictions were the primary cause of the slump in demand back then and in January. There was also a consistent theme across all 12 UK regions as far as new orders and employment were concerned, with contractions across the board.
“Within Northern Ireland, this theme of falling output, orders and employment was also evident across all four sectors.”
“Higher shipping costs were widely cited alongside higher raw material costs and increased transport costs linked to the new Brexit arrangements.
Prices Of Goods & Services Rise
“As a result of these cost pressures, local firms, most notably retailers, hiked the price of their goods and services at the fastest pace since October 2018.”
“2021 has been the year of the rollout on two fronts. The rollout of the vaccine will be the single biggest factor driving economic performance later in the year.
“Meanwhile the rollout of red tape linked to the new Brexit arrangements will hinder Northern Ireland’s economic recovery by adding costs to business and restricting trade.
“While Northern Ireland has the advantage of remaining within the EU’s single market for goods, it finds itself on the wrong side of a regulatory sea-border which has effectively redrawn the map of the UK’s single market and customs union.”
A Compromise Needs To Be Reached
This is rather gloomy news and it is hoped that eventually it will be made easier for businesses to trade across all borders so that goods will flow more quickly and costs will be kept to a minimum. The extra red tape caused by the break with the European Union isn`t going to go away now but we are sure it can be made less problematic and easier to complete as the weeks roll on. Let us hope so.