As originally appeared in the Irish News, Tuesday 7 June
Head of Tax at Baker Tilly Mooney Moore Angela Keery
Much has been said and written about the impact of the Northern Ireland Protocol on business in Northern Ireland. For many businesses there is a real economic advantage in having unique access to EU and UK markets, although given the level of administration and documentation now required when moving goods from GB to NI, some sectors will have no doubt felt the pressure more than others. We have, however, reached a point where movement on the issue either way is now vital for the continuation of business in Northern Ireland.
Business owners, employees, suppliers and investors all need certainty before they can move forward with any significant decision. Though the chaos of the pandemic is now firmly settled, companies here are left facing a third year of instability as we lurch from a health crisis into a political one.
This is not to deny the political concerns that exist around the Protocol and its implications for trading between the UK and Ireland. But the reality is that in business, the political impasse it has created is causing more of a threat.
Earlier this year, four in five accountants surveyed by the Chartered Accountants Ulster Society reported that the Protocol is in fact presenting avenues of economic opportunity for the region. Despite persistent concerns over energy costs and supply chain disruption, the economic outlook has been more positive than anticipated in recent months, and whilst some businesses have moved to seize on the opportunity to trade with access to both the UK and EU markets, others have held back, awaiting clarity.
Any window of opportunity presented by the NI Protocol grows smaller, however, as we continue without a fully functioning Executive to represent us. The reality is that political stability is a prerequisite to strong levels of investment. Northern Ireland has the thriving start-up scene, world class skills pipeline and attractively low cost of doing business needed to tick all of the other boxes for potential investors.
We could, therefore, be missing out on both inward investment and the expansion of indigenous companies as the prolonged impasse caused by the Protocol continues.
Almost two months into the new financial year, four out of five employers have reported to the British Chambers of Commerce that they have been negatively impacted by the rise in National Insurance Contributions. For that 81%, the increase was a body blow in the form of increased staffing costs and prices.
Pair that with the rising energy costs, soaring inflation and supply chain bottlenecks that have combined to cause the Bank of England to raise the alarm for recession, businesses here are in no more of a stable footing than they were this time last year when talk of economic recovery from Covid-19 was the focus.
That said, there is no doubt the Protocol causes real problems for business owners in some sectors. Just look at the difficulties in haulage as companies navigate the red tape in the hope of the UK Government’s so-called ‘green lanes’ proposal becoming a reality.
These issues of the cost of living, rising cost of doing business, under pressure supply chains and looming recession are impacting businesses now right across the board. No matter the outcome of the current discussions, companies need decisive action on the Protocol that opens a clear pathway for business growth, investment and recovery going forward.