Huge de­cline of over 50% in for­eign in­vest­ment here in 2017

Lack of an Ex­ec­u­tive and Brexit partly to blame, says economist

Belfast Telegraph - Business Telegraph - - Front Page - BY MAR­GARET CAN­NING

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.”

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