Brexit business confidence in the North hits new nadir: AIB Index
An influential index of the attitude of local business to Brexit has reached a new low as the United Kingdom's departure from the European Union looms ever closer.
The AIB Brexit Sentiment Index for October 2019 has hit its lowest point since the measure was introduced two years ago.
The Index reflects and measures the sentiment of SMEs in the North towards Brexit, summarised as a single number, with a potential range from +100 to -100.
It takes into account Brexit's impact on business now, its impact on future business (next 5 years), the lack of visibility of a Brexit outcome, and the wider economic impact of Brexit.
This month the index for the North has hit a nadir of -41, the lowest point since the third quarter of 2017.
Brian Gillan, Head of Business and Corporate Banking, First Trust Bank, said: "The decrease in NI’s overall sentiment towards Brexit this wave has been driven by greater negativity regarding both the future impact on the business - up to its highest level so far at 67 per cetn and the wider economic impact, which is also up to its highest level of 70 per cent.
“Sentiment is down across all sectors, but worryingly is at an all-time low in the Manufacturing and Tourism sectors, both important sectors for the NI economy.”
He said businesses in the North had witnessed a notable worsening across all impact areas except for cost competitiveness.
“This continued uncertainty is also severely hampering investment planning with 66 per cent of NI businesses this wave advising plans have been cancelled or postponed.
"In tandem, a higher proportion of NI SMEs are postponing bank borrowing for capital investment due to Brexit – up to 19 per cent.
"Demand for working capital over the next three years appears relatively mixed with surprisingly only 24 per cent of NI businesses of the view that their requirements will increase post Brexit,” he added.
Mr. Gillan revealed that despite the imminence of the October 31 Brexit deadline just 6 per cent of businesses in the North had a formal plan.
Fifty-three per cent of businesses in the North haven't started planning yet and almost half have said they are not confident that they understand what a no-deal would mean for their business.
“The latest campaign from cross border trade body InterTradeIreland to encourage Brexit planning hasn’t missed the mark – visually labelling Brexit as ‘the elephant in the room’.
"While we understand the reluctance of businesses to plan, given the levels of uncertainty we believe there is still value in considering the potential impacts of Brexit on your business – especially in a no-deal scenario,” he said.