Managing the challenges and the opportunities in 2017
by Angela McGowan , Regional Director CBI Northern Ireland
espite the rapidly changing political landscape in 2016 , the business
Dcommunity has remained focused on growing revenues , creating jobs and trading in local , national and global markets .
However I must admit that sometimes during 2016 it felt like the odds were stacked against the Northern Ireland business community with the EU referendum result delivering an unprecedented level of uncertainty around future trade and access to skills . In addition , CBI surveys showed that weak sterling caused problems for around 47 per cent of firms in the latter part of the year as input prices shot up by 12.2 per cent in the year to October .
Local companies have also endured delays in those much needed infrastructure improvements that we desperately need if we are to remove bottlenecks in arterial routes and also deliver the energy , water and telecommunication services that are fit for a 21st century economy .
Unfortunately the obstacles for local companies don ’ t stop here with many larger companies now facing a hefty Apprenticeship Levy in the year ahead .
Support for business :
I joined the CBI team in Northern Ireland in October 2016 and I have no doubt that the pressures on local industry have escalated dramatically since June 23rd .
But importantly there are also positive stories out there too which I have come across when visiting CBI members .
For example , it is great to hear from the firms that have had good support from Invest NI to scale up their business , raise innovation levels or access foreign markets .
Nearly one in three companies have also reported that the weak pound is pushing up their export sales and some firms are benefiting from the ‘ import substitution ’ effect as UK buyers are ordering local produce because it is now significantly cheaper than foreign imports .
Support for business in the year ahead will continue to come from cheap credit . The Governor of the Bank of England , Mark Carney , quickly reacted to the referendum result and in August last year he sent out a strong signal to markets that the UK economy would have no problem with liquidity in the months and years ahead .
It was all action in August as the Governor introduced an interest rate cut to 0.25 per cent , a Term Funding Scheme to facilitate the interest rate passthrough and , in addition , a
further £ 70bn was added to the Quantitative Easing programme .
These new asset purchases of both government and corporate bonds are still ongoing and should continue to exert some downward pressure on gilt yields . However we must remember that gilt yields will also be sensitive to developments around the Brexit negotiations as well as the inflation outlook .
With Article 50 not yet triggered , any further change in monetary policy seems to be off the table for now , but with interest rates at historic lows , finance managers across Northern Ireland should be relatively content that external finance will remain relatively cheap in the short to medium term .
The year ahead CBI economic forecasts suggest that UK growth will drop back to around 1.3 per cent in 2017 as higher inflation begins to weigh down on consumer spending and business investment falls back due to heightened uncertainty .
Despite the challenges local businesses remain committed to growth . CBI members are acutely aware that companies cannot work in isolation .
They are keen to play their part in local communities and raising living standards right across Northern Ireland . Peace and prosperity go hand in hand and therefore the business community is keen to support the local Executive to deliver its new Programme for Government in the months and years ahead .
Here at the CBI we have a busy calendar of events planned for 2017 so that we support our members with delivering that growth and job creation . In particular there will be a heavy emphasis in the months ahead on infrastructure , innovation , education and skills as well as productivity .
Of course making a success of Brexit will remain a constant theme in the background and the CBI at both the local and the national level will work relentlessly to ensure that Northern Ireland ’ s business needs are well documented and at the top of the agenda in the forthcoming negotiations .
What will the CBI be doing next ? The decisions we need to take over the coming months will last for generations , so we must get them right . We need a strong working partnership between government and business and we will be looking to build on progress we have made so far .
We need to explore the issues emerging in each sector as companies consider the implications of leaving the EU on individual business models , while focusing on the key crosscutting issues likely to affect all sectors of the economy . Ensuring that the UK government and the local Executive fully understand the potential ‘ cliffedges ’ for business operations on leaving the EU will be a priority .
Collaboration will be key to success
In 2017 we will be looking to build consensus views from the business community in order to minimise the risk of government hearing divergent messages from business . This includes : increased cooperation with the other major business organisations , working with international business organisations and our European sister organisations .
With many CBI members in Northern Ireland successfully operating ‘ allisland ’ business models our work with Ibec in the Republic of Ireland will be stepped up significantly in 2017 .
In addition , CBI NI fully recognises the importance of engaging with influential nonbusiness stakeholders and therefore continued collaboration with further education colleges , universities and the voluntary sector will also be a key component of our work .
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