NI Economy: Inflation threatens post-Covid recovery

Inflation appears to be weighing on manufacturers in particular

Northern Ireland businesses continued to recover from the impact of the Covid-19 pandemic in the first quarter of 2022 but inflation is a growing problem, a survey suggests.

The NI Chamber of Commerce surveyed more than 200 members in late February and early March.

Inflation appears to be weighing on manufacturers in particular weakening cashflow and profitability.

Manufacturers appear to be scaling back investment plans due to rising prices.

Ukraine invasion

The survey took place before Russia's invasion of Ukraine.

The chamber said that while a majority of respondents - 60%- expected to grow their turnover in 2022, that represents a weakening of confidence.

The last survey, for the final quarter of 2021, suggested 70% of businesses were expecting to grow their turnover at that time.

• NI's economy recovering strongly, survey suggests

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Official figures published last week suggest that the NI economy recovered strongly from the impact of the pandemic in 2021.

The NI Composite Economic Index showed growth of almost 5%, comparing end of 2021 with end of 2020.

However, most analysts expect that growth rate to slow sharply this year as businesses and consumers grapple with rising costs and government spending related to the pandemic is reduced.

Protocol red tape

The survey also suggested that more businesses are getting to grips with the new red tape which flows from Brexit and the Northern Ireland Protocol.

In the first quarter of 2021, 16% of respondents said the changes were posing significant challenges. That figure had fallen to 8% in the first quarter of this year.