Belfast Briefing: North faces ‘rougher road’ post-Brexit

Northern Ireland faces a “rougher road ahead” than any other UK region post-Brexit and not just because of its EU land border, the new director of one of the North’s largest business bodies is warning.

Angela McGowan, the first woman to be director of the Confederation of British Industry (CBI) in Northern Ireland, believes the North is “more vulnerable” to looming Brexit ramifications that other regions, which is why she believes the North needs to make sure its voice is heard loud and clear in the discussions getting under way.

McGowan, who before moving to the CBI was chief economist with Danske Bank UK, is adamant that any UK deal with the EU must fully acknowledge how it would impact on the ground in the North.

As an economist she knows the numbers. Northern Ireland has a valuable relationship with the EU – from the estimated £144 million per year the North receives from EU programmes to its multimillion pound export sales to the Republic every year .

But McGowan is also a pragmatist – the vote has been cast, it may not have been to her personal preference, but she says businesses have no choice but to move on.

The North’s political leaders also need to get the “best deal possible” to create the right environment for local firms to grow and the economy to flourish.

She is determined that the interests of CBI’s member firms in the North will be well represented in that process. “I think there has never been a more important time for the local business community and the Executive to work in partnership. We all have Northern Ireland’s best interests at heart – we want to create prosperity and raise living standards”

Local economy

She says one of the reasons the North is more vulnerable to Brexit fallout than other regions of the UK is because of the nature of the local economy – it is small firm-orientated and also not a large exporting region.

McGowan has said that when Northern businesses do go down the export route they naturally turn to the Republic, and this is why the debate over a hard or soft border is so crucial for the North’s future.

“We are dependent on EU trade, particularly with the Republic, and we have to be very aware of that. We also need to be aware that we want to retain the ability to attract people to come and work in Northern Ireland, whether from the Republic or further afield, and this is a key issue in any Brexit negotiations.”

According to McGowan, while the post-UK vote currency swings may be paying off for retailers in Border towns and cities at the moment, long-term there could be less of a silver lining as far as the weak pound is concerned.

She says it may boost exports and cross-Border trader at the moment but the ongoing depreciation of sterling will inevitably reduce incomes, which will dampen household spending in the long run.

According to Danske Bank forecasts, consumer spending growth in the North could slow from 2.1 per cent this year to 1 per cent in 2017-18.

Aside from the risk that this could undermine local economic growth, one of her other major concerns is how any Brexit fallout could affect Northern Ireland’s ambitions to attract new foreign direct investment.

Infrastructure issues

The CBI director says, Brexit aside, there are immediate daily challenges closer to home for businesses, and one key issue is local infrastructure issues which are frustrating local firms.

A new CBI survey published on Tuesday in conjunction with AECOM, a global architecture, engineering and construction company, shows businesses have identified a number of major weaknesses when it comes to the North’s infrastructure, particularly roads, digital connectivity and energy.

Among the key findings are that 87 per cent of Northern Ireland businesses say the delivery of a second North/South energy interconnector is a major priority for the local economy, while 54 per cent of Northern businesses believe that more domestic flights to the rest of the UK is critical for the North.

McGowan says that over half of local businesses are dissatisfied with the region’s infrastructure and are concerned about future projects. “Our message is a simple one: at the end of the day delivery is what matters. Businesses need clear, deliverable timetables for action on major projects in order for them to act as magnets for investment, growth and jobs.”