A combination of Brexit uncertainty and more than two-and-a-half years with no regional government are taking their toll on the economy of Northern Ireland and construction work is starting to dry up.
The latest state of trade survey, for the first half of 2019, conducted by the Construction Employers Federation of Northern Ireland finds that only 35% of respondents are now at full or almost full capacity. This is down from 75% when the survey was last conducted just six months ago.
Pessimism is on the rise; 60% of respondents think the local construction market will worsen in the next 12 months, while 25% think it will stay the same.
The survey also found that 28% of firms have already made redundancies, with a further 48% considering this likely in the next three months; 25% of firms described themselves as in survival mode – up from 20% six months ago.
As a direct result of the Stormont impasse, 60% of firms have put off growth plans. And 75% of firms believe that, if the UK is to leave the EU on 31st October, it must do so with an withdrawal agreement and transition period; 15% believe the UK should leave without a deal and 10% have no view.
The survey took the opinions of 80 Northern Ireland headquartered construction firms who, collectively, turned over approximately £975m last year.
Construction Employers Federation managing director John Armstrong said: “This is, unquestionably, the most challenging survey we have conducted of the industry since 2012. As Brexit continues to dominate the agenda, this survey is the reality of over two and a half years since the collapse of the Northern Ireland Executive and additional continued economic uncertainty."
Northern Ireland has been without a regional government since the power sharing agreement between the Democratic Unionist partyand Sinn Féin broke up in January 2017.
John Armstrong said: “The key impact now being seen across the board is on jobs. The industry is reporting alarming increases in redundancies and projected redundancies since our survey was last conducted in February. Added to this, there is a systemic sustainability risk which is making more and more firms once again look with concern to their future.
“The restoration of the Northern Ireland Executive cannot, alone, solve this crisis. However it being in place is a crucial enabler to having a sustainable pipeline of work, putting in place multi-year budgets which can provide certainty to the market and dealing with the key infrastructure funding challenges which are continuing to hold otherwise vital development back.
“Those funding challenges are most prevalent with NI Water. The consistent underfunding of NI Water has led to a drastic curtailment in much needed wastewater treatment works upgrades right across Northern Ireland and, consequently, a significant slowdown in the number of new homes being started and completed. We and our members find it staggering to the point of absurdity how little political focus there is on fixing this issue given how critical it is to development of all types, not just new homes.”
He concluded: “Fundamentally, the price control process that NI Water are currently engaged in for the period 2021-27 is going to make the situation no better. For as long as their governance and financial model remains as it is, we will continue to face into a funding black hole which will make practically all of our collective infrastructure goals unachievable. A restored Northern Ireland Executive has to make this their number one infrastructure challenge to resolve – it will not be acceptable to simply kick the can down the road again.”
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