Chartered Accountants cite political uncertainty and
Brexit as key factors in year ahead
A survey of 315 Chartered Accountants across all sectors of the Northern Ireland economy suggests slow growth for the local economy in the year ahead.
The survey by Chartered Accountants Ulster Society found that its members regarded political uncertainty and Brexit instability as key issues likely to affect the economy over the next 12 months.
Cuts in government spending, concerns around the increasing cost of doing business and rising inflation also featured as negative factors affecting the local economy.
The Economy
In general terms, while 72% said that they believed the economy was growing slowly or moderately, only 13% viewed prospects for the year ahead as ‘good’ or ‘very good’, significantly down from 32% of members in the previous year.
29% saw prospects for the coming year as ‘poor’ or ‘very poor’, a rise of 11% points since last year.
The issues felt to have the most potential to negatively affect the economy in the year ahead were political instability (95% of respondents) and Brexit uncertainty (80% of respondents).
On a more encouraging note, 37% of those surveyed identified an improving global outlook as a potential upside.
Brexit
59% of respondents said it was ‘critical’ to protect the Common Travel Area with the Republic of Ireland, while 95% were opposed to a hard border. 96% said they wanted free trade in goods, services and capital to be an important aspect of any deal negotiated with the EU.
4 out of 5 Chartered Accountants believed that Northern Ireland will be more negatively affected by Brexit compared to the rest of the UK.
Corporation Tax
A reduced rate of Corporation Tax in Northern Ireland was identified as potentially a major benefit for the local economy, with 63% saying a lower rate would have a positive effect on Northern Ireland’s economic performance.
Jobs, Skills & Wages
On the issue of jobs and skills, the survey showed that over half of respondents did not expect head count in their own organisations to change, with 27% expecting an increase in employment levels and 16% expecting a reduction. Two in every five of those surveyed said that their organisation was currently experiencing skills shortages.
The survey did predict a squeeze on wages, with more than 7 in 10 expecting wage increases for the coming year to be below the current rate of inflation (2.9%, Office for National Statistics, June 2017).
Comment
Pamela McCreedy, Chair of Chartered Accountants Ulster Society which represents over 4,000 Chartered Accountants in Northern Ireland, said: “Despite an improving global economy our members are predicting more modest prospects locally, with economic prospects slipping back from 2016 and 2015 levels.
“The uncertainty created by Brexit stands out. Our members clearly feel that Northern Ireland may be more negatively impacted by Brexit than other UK regions and have sent a strong message that they see avoiding a hard border with the Republic of Ireland and free trade with the EU as vital components of any Brexit negotiations.
“I believe that the business community will press forward despite the perceived challenges. We hope that the local political parties will be able to resolve outstanding issues so that a Budget and a new Programme for Government be put into place which can give direction and clarity for Northern Ireland.”
Independent economist Maureen O’Reilly, who formulated and analysed the survey of Northern Ireland’s Chartered Accountants said: “The survey results suggest that the broad view of members is that Northern Ireland’s economic prospects are weakening.
“Most Chartered Accountants in the survey believe that the economy is either growing slowly or indeed stagnant and do not feel a strong sense of positivity about prospects in the year ahead. Only 13% viewing prospects as good or better. Uncertainty and instability are certainly weighing down on views around the performance of the local economy in the near term at least.”
Key findings in the survey include:
60% feel that the NI economy is growing slowly; 12% growing moderately; 21% feel the economy is stagnant.
58% Feel the outlook for the NI economy in the year ahead is ‘Fair’; 26% feel the outlook is ‘Poor’ and 3% ‘Very Poor’; 11% say ‘Good’; and 2% ‘Very Good’
Brexit was rated as ‘strongly negative’ for the local economy in the coming year by 51%; A further 29% viewed it as a ‘negative’ factor.
Political uncertainty, Government spending cuts, increased business costs and rising inflation were all highlighted as impacting negatively on the local economy.
A reduced Corporation Tax rate for NI and an improving global outlook were cited as the most positive factors for the local economy in the year ahead.
315 Chartered Accountants took part in the survey.