Business Opinion - part 1 - in association with Ulster Business magazine

Contents :

GRAPHICAL REPRESENTATION OF REPORT

In conjunction with Ulster Business magazine, Millward Brown Ulster has continued with its annual survey of business opinion. This year the survey has been conducted at the end of 2004 and into early 2005, at a time when the Northern Ireland political situation was still in limbo with the suspension of the Assembly and the reversion to Direct Rule. Although it appeared that much progress had been made, the proposed political deal finally unravelled, the week before our survey started, over the issue of photographic proof of decommissioning. While two-thirds of the interviews were carried out before the infamous Northern Bank robbery, interviewing continued in the wake of this robbery and the ensuing political fallout from the implication that the IRA was involved. On the surface, economic statistics on GDP and unemployment suggest progressive development during 2004, but weaknesses continued to emerge in the loss of manufacturing centres and the recognized oversize of the public sector.

The research was carried out through the medium of the Millward Brown Business Omnibus Survey. This survey (conducted quarterly) comprises telephone interviews with a cross section of 200 directors, senior managers and executives of private-sector manufacturing and service companies. As such, the results represent the opinions of the business community as individuals rather than companies. Interviewing was conducted at Millward Brown’s 35-station Telephone Research Centre in Belfast.

Business confidence has increased marginally this year, almost back up to levels seen back in 2000. Optimism fell between 2000 and 2001 and then stayed remarkably stable for the next three years. At the close of 2004 more than 1 in 10 (12%) felt very optimistic about the next 12 months while a further 1 in 2 (55%) were quite optimistic.
Insurance costs were most likely to have been cited as a significant obstacle to the company growth, mentioned by 4 in 10 respondents. However the distinction between insurance and other obstacles was not as pronounced as in 2003 when the high levels of insurance costs were very topical, being blamed for the demise of many small businesses. This year insurance costs were more closely followed by interest rates (36%) and red tape (36%). Political uncertainty was cited as a significant obstacle by 23% and lack of ambition by 12%. Interest rates, having risen over the course of 2004 were seen as the biggest single obstacle to the growth of companies in Northern Ireland (16%).
However in the bigger scale of things, political uncertainty was the most likely to be cited as a significant obstacle to the growth of the economy in Northern Ireland in general, with more than 1 in 3 (35%) mentioning it. Interest rates were the next most likely to be cited, seen as a significant obstacle to Northern Ireland’s growth by 27%, followed by shortages of skills (18%). 14% thought being outside the Euro was a significant obstacle while the size of, or our reliance on, the public sector was equally castigated. Only 7% cited lack of entrepreneurship as an obstacle.
That 35% saw political uncertainty as a significant obstacle to the growth of the economy of Northern Ireland is borne out by the similar number, 37%, who felt that the Northern Ireland Assembly had improved conditions for business and industry here. Few (7%) thought the Assembly made conditions worse, while around half (52%) thought it hadn’t made any difference. There was a divergence of opinion on what effect the suspension had had on those same conditions for business and industry here with half (50%) believing conditions had suffered and nearly half (42%) judging them not to have suffered.
And what about the future? More than half (57%) believed that a devolved government was better for business in Northern Ireland in the short term, almost a fifth (18%) thought direct rule was better while 15% felt it would make no difference. As for the long term, there was little distinction made with the opinions for the short term.
In light of the recent unveiling of the EU referendum question in relation to the UK approving the treaty establishing a constitution for the European Union, it was interesting that nearly 4 in 10 (38%) felt that the European Union had too much say in the economic affairs of Northern Ireland, while 3 in 10 (31%) felt it had just the right amount of say with almost a further 2 in 10 (17%) off the opinion that it had too little say. These measures were very similar to those seen in 2001 and 2002 but showed a more positive opinion of the EU than in 2003, when more than half (54%) thought the European Union had too much influence over Northern Ireland’s affairs.
Again there is a divergence of opinion in relation to the Euro. 42% of business executives are in favour of the UK becoming part of the European Monetary Union, with 38% opposed (the remaining 21% said they were unsure). However the majority (68%) thought it was at least fairly likely that that the UK would be part of the European Monetary Union within the next five years, only 19% felt it was unlikely. As to whether or not they felt their companies had been affected by the UK not being part of it, 15% felt they had been adversely affected while 13% felt it had been to their advantage. 70% thought it had made no difference.
A £16 billion programme for improved services and economic growth in Northern Ireland was announced in late December 2004 outlining spending from now until 2015. This investment strategy is designed to facilitate the major improvements required to Northern Ireland’s infrastructure. It is intended that infrastructure investment will grow by 30% in 2005 alone. Our survey shows that with the exception of telephone and internet communications (with which 27% were very satisfied), less than 2 in 10 were very satisfied with each of the main elements of Northern Ireland’s infrastructure as it serves the needs of business and industry: the quality and extent of the roads network and waste removal facilities, came in for particular criticism.
In order to afford these improvements, it was announced that the government would maintain the levels of rates increases, with increases in the Domestic Regional Rate and the Non Domestic Regional Rate planned for the next few years as well as the long term plans for the introduction of water charges. However, the survey findings would show that few (14%) business executives find the current levels of rates acceptable. Executives were more likely to rate current levels of income tax as acceptable (30%), corporate tax (23%), employers NIC (32%) and VAT (40%).
More than a third of business executives felt that red tape was a significant obstacle to the growth of their companies. All respondents were asked which areas they felt were most burdensome. Health and safety compliance was seen as the most burdensome, cited by 37% of the sample. This was followed closely by VAT return and inspection (32%), statutory employee benefits (30%), recruitment legislation (26%) and fair employment monitoring (22%).
Nearly half (46%) of these business executives claimed to work for companies that did not contribute towards the pension funds of their employees. However, of those who did work for companies who did contribute, the majority (69%) rated the company pension contributions as adequate.
In terms of their own personal pension provision, less than 1 in 4 23% were very confident that they had sufficient pension provision. Nearly half (45%) were not confident at all.