A Northern Ireland view | KPMG | IE

A Northern Ireland view

A Northern Ireland view

Our CEO survey assesses attitudes under three broad headings, namely a) economic and business sentiment, b) the risks and opportunities business face and c) the specific actions CEOs are taking to manage these issues.

1000

Contact us

Also on KPMG.com

Titanic Quarter, Belfast

Northern Ireland CEOs are generally positive about their short-term growth prospects and although acutely aware of the challenges posed by Brexit, have adopted a “getting on with business” approach to current uncertainties. According to John Hansen, Partner in Charge of KPMG in Northern Ireland; “Businesses in Northern Ireland are resilient by nature. They have evolved to operate and succeed regardless of and sometimes because of the local political environment. Northern Ireland also has an enviable record of successful, indigenous business and a roll call of inspirational “home grown” CEOs who have embraced opportunities and demonstrated strong leadership skills.”

CEOs are positive about the growth prospects for their business over the next 12 months, with all respondents indicating confidence in future growth. However they are decidedly less confident about the prospects for the Northern Ireland economy in the year ahead – with only 40 percent confident about economic growth. Shaun Murphy, Managing Partner of KPMG in Ireland elaborates; “CEOs are often more bullish about their sector and industry than the wider economy and tend to be more confident about what they know and what they feel they can control - this perspective reflects our research locally and indeed worldwide.”

Meanwhile John Hansen believes that whilst the current generation of local CEOs are both resilient and adaptable, they recognise that political stability is an essential backdrop for both their individual businesses and the Northern Ireland economy.

The Brexit Challenge

John Hansen highlights the inevitable confidence differences within Northern Ireland business that are often sector and firm specific. “Depending on the sector, CEOs here have had mixed experiences since the Brexit referendum in relation to fluctuating exchange rates – for some it has helped them win new business and grow exports, but for others they’ve had to battle with input cost inflation which has driven up output prices.”

Hansen references currency sensitive sectors such as hospitality, tourism and retail that are enjoying the benefits of a weaker pound - citing the increase in visitors and shoppers from the Republic as one of the direct results of the fall in Sterling. However he also highlights major challenges for CEOs leading companies with a dependency on cross border trade and access to EU labour, noting that “These businesses are significantly less certain about their future performance and growth prospects.”

For Johnny Hanna, Head of Tax at KPMG in Belfast, the reported gap in confidence between CEOs regarding their business and their apparent lower positivity about the wider world is at least partly driven by Brexit related sentiment and the risk of protectionism - particularly under the new US administration. Many business leaders involved in trade would prefer for life to continue as is - however they are realistic enough to know that change and disruption are inevitable ” says Hanna. “The uncertainty around whether Brexit will result in a soft or hard border is an over-riding concern for many CEO’s” he says, noting concerns expressed around the continued freedom of movement of goods, services and people across the island of Ireland and how vital this this to Northern Ireland’s future and to many of its businesses.

Hanna highlights that the possible introduction of new tariffs, significant red tape and other non-tariff barriers could have major implications for a number of important sectors in Northern Ireland in the event the UK leaves both the EU Single Market and the EU Customs Union. “The lack of certainty on matters such as the current and future rights of EU citizens living and working in Northern Ireland, continued access to EU labour post Brexit and whether a transitional period can be agreed early in the negotiation process to allow businesses a few years to adapt to whatever form of hard or soft Brexit we end up with – is causing a lot of frustration for business leaders. Despite all of that, it is encouraging to note respondents’ ‘getting on with business’ approach, with many anticipating some opportunities from Brexit as well as challenges.”

Tax Matters

On the issue of taxation, Johnny Hanna believes that Northern Ireland needs to deliver on the 12.5 percent rate of corporation tax as soon as possible. “Many CEOs that we speak with believe it’s important to recover the momentum behind the plan for a lower corporation tax in Northern Ireland, one of the few areas where there has been local political consensus and strong support from the business community”. According to Hanna, “This is important not just in enhancing our offering for “new” foreign direct investment, but also in providing a fiscal stimulus for our existing indigenous businesses - many of whom expect to reinvest any resulting “savings” into the business”.

While the tax differential between Northern Ireland and the rest of the UK might only be 4.5 percent (e.g. if the UK rate reduced to 17 percent rate by 2020) it would still provide a welcome advantage when encouraging businesses – perhaps even those from the EU looking to establish a UK presence post Brexit – to choose Northern Ireland as a location over say Leeds or Edinburgh. Hanna concludes by saying; “Then of course there is the possibility that a future UK government might decide to take a very different approach to UK corporation tax policy and actually increase rates!”

Irish CEO Outlook Survey 2017

Irish CEO Outlook Survey 2017

Insight into the challenges and opportunities faced by Irish CEOs

Connect with us

 

Request for proposal

 

Submit