Huge decline of over 50% in foreign investment here in 2017
Lack of an Executive and Brexit partly to blame, says economist
THE lack of an Executive, worries over Brexit and concerns over social policy here are contributing to a fall-off in overseas investment with new projects down by over 50%, it’s been claimed.
Foreign direct investment into Northern Ireland plummeted during 2017 with a 54% drop in projects, according to the EY Attractiveness Survey.
The survey found that there were just 19 new projects by overseas firms during the year. And Northern Ireland was the worst performing region of the UK with the steepest decline year-on-year. Wales, the next-worst performer, experienced a fall of 17% in its job-creating projects from overseas to 33.
But a spokeswoman for economic development agency Invest NI — responsible for attracting investment from overseas — said: “EY’S results count in- vestment from outside of the UK during a calendar year and therefore this does not reflect the full picture of FDI success in Northern Ireland.”
Citing fdimarkets.com and population estimates for 2016 from the Northern Ireland Statistics and Research Agency, she said: “Over the past five years (201314 to 2017-18) Northern Ireland attracted more FDI jobs per head than any region in the UK.”
But economist John Simpson said: “There should be little surprise that NI is now performing poorly in the attraction of FDI. The combination of the widely reported continuing political instability in the devolved institutions plus the negative fears about the impact of Brexit, which have been worsening month by month as the UK-EU talks become less amicable, has created a degree of uncertainty about business investment in NI.”
And he said that uncertainty over business investment was creating “a serious handicap for Invest NI and for us all as individuals hoping to improve our economic prosperity”.
But Mr Simpson said the debate over the introduction of same-sex marriage and abortion in Northern Ireland was also contributing to concerns about Northern Ireland as a location for investment.
“The uncertainty about the future role of the border on the island, along with the social worries about equal marriage, the concerns about a greater degree of compassion in dealing with abortion, and an intractable disagreement on the freedoms in the use of Irish language are all homemade obstacles to improving the economy.”
The report was carried out by the UK staff of business advisory firm EY.
Invest NI said its calculations on FDI included investments from companies in Great Britain into Northern Ireland, which were not included by EY.
It added that during the 2016 to 2017 financial year, “externally-owned businesses created 2,447 jobs in NI, supported by Invest NI”.
Neil Gibson, chief economist at EY Ireland, said a calendar year — as used in the Attractiveness Survey — was not an adequate period in which to judge FDI performance.
“It is a weak year on this measure, and disappointing — but it’s set in the context of a very strong year previously.
“It will be important to see if this reflects a step change to a lower level or a blip.”
He said the competition for FDI was getting tougher, with a greater offer from Central and Eastern Europe.
And in addition, he said that with NI now claiming a healthy employment rate of 69.7%, attracting jobs was no longer the main priority.
“It is increasingly about improving capabilities and looking to increase productivity amongst incumbents and ensuring sustained competitiveness.”
But he said Brexit was slowing down investment in finance jobs in the UK — but that digital investment had stepped up in NI. “The prospects for it remain very strong as they are tied very closely to talent levels, rather than EU market access.”
And he said that while a lack of an Executive did not help “it is worth reflecting that the lead time on investments means that it is debatable how much direct impact that would have had on last year’s numbers”.
Niall Harkin, chairman of Chartered Accountants Ulster Society, said: “Questions around how Brexit may affect the trading environment in NI, plus the uncertainty that comes from the current political stalemate, make it much more difficult to attract FDI.
“Our members feel strongly that political stability and a realistic plan for how the border will be managed are required as soon as possible, so that we can begin to restore confidence and to attract the jobs and economic development that FDI would bring.
“Over three-quarters of our members feel that NI will be more adversely affected by Brexit than other regions of the UK.”