It was former President Bill Clinton who once said “focus on the trendlines not the headlines”. This is good advice, especially for economists and the media who tend to be overly focused on minor movements in data.
That said, the headline data for Northern Ireland’s economy is by no means bad this month – with unemployment at 1.9% and this year’s GVA growth forecast to come in at a fairly solid 1.2%.
A quick glance at the trendlines for both economic growth and exports reveals steady improvement over time. For example, ONS data tracking GDP per capita for all UK Regions and sub-regions from 1998 to 2022 shows that Northern Ireland’s per capita income grew from £13,290 in 1998 to £29,674 in 2022 (an increase of 123%). Given the significant number of economic shocks in recent years, namely the financial crisis, Brexit, Covid and the energy and inflation shocks, our overall economic performance has been relatively good.
Export levels have also been improving. Companies are only starting to reap the benefits of the Windsor Framework, which allows Northern Ireland firms unique access to both the GB and the EU markets for trade in goods. Indeed, Northern Ireland is currently an outlier relative to the rest of the UK when it comes to recent exporting performance. UK government statistics show that in the year ending March 2024, UK trade in goods had decreased by 5.9% in all UK regions apart from Northern Ireland – where exports to the EU increased by 4.4% and exports to non-EU countries increased by 24%.
The benefits of exporting are well-documented. Typically, foreign sales drive a company’s innovation levels upwards, increase productivity and competitiveness and support job creation. But fully grasping the opportunity that is presented by the Windsor Framework will be a key factor for Northern Ireland’s long-term success – and that opportunity does not stop with local firms but extends to global trading partners and international investors looking to locate in the region.
Economy minister Conor Murphy and Invest NI have embarked on several trade missions in recent months. These overseas trips are used to inform other countries about investing in the Northern Ireland economy and building stronger trading relationships with local companies.
While the EU is a hugely important trading partner for Northern Ireland given its size and proximity, we cannot forget that Asia and the US also present huge exporting opportunities for local companies and have great inward investment prospects.
Indeed, in September, just before the US election, Minister Murphy and officials visited the US and Canada on a trade mission. At that time, it was noted that there are currently 320 Northern American firms that have chosen to base themselves in Northern Ireland, with NI exports to North America and Canada worth £2.3 billion in 2023/4.
The US election result has raised fears around trade disruption, with the incoming President threatening to increase trade tariffs not just with China, but a further 10 to 20% tariff could be put on US imports from elsewhere. While ‘what is threatened’ and ‘what unfolds’ can often be two different things, one thing is for certain – the incoming President wants to protect US manufacturing. At a time when geo-political tensions are extremely high there may be some arguments for doing that, particularly when it comes to the manufacturing of communications, security equipment, energy and food security.
But ultimately, higher tariffs and a smaller workforce, assuming that President Trump will follow up on his threat to crack down on the supply of migrant workers, is going to be inflationary for US consumers and could impact Northern Ireland’s ability to sell into this market competitively.
Interestingly though, one local agri-food producer told me that this sector expects Trump’s tariffs on China to drag down global commodity prices, leaving input costs significantly lower for local importers in Northern Ireland. Clearly the implications of a Trump Presidency and bold trade policy in the US have far reaching and complex implications. For this reason, building good US political relationships with the new administration is going to be crucial not just for local politicians, but for the UK and the EU.
Trade missions to the US become even more important when we have strong political personalities in post or differing perspectives. At the end of the day, we must assume that all leaders are eager for their economies to succeed but there will always be some areas for good collaboration; areas which can present a win-win for both economic parties. Regardless of who is in the White House and the economic policies that may ensue, Northern Ireland’s offer to US investors remains the same.
Locating here gives US companies good access to the UK and EU markets, a place where good governance and the rule of law are upheld, investing in a country which presents no threat to US national security and Northern Ireland also has those deep and historical ties with the US. We currently have a growing footprint of Northern Irish companies selling quality products and services into the US, such as Norbrook, Almac, Devenish Nutrition, Wrightbus and many more.
There are hundreds of US companies that see the value of locating an office or manufacturing hub here also. By building good political relations these areas of economic co-operation should continue long into the future. While things may seem unsettling today, let’s decide to focus on the trendline and not the headline when it comes to this new political and trading environment.
- Angela McGowan is director of CBI Northern Ireland
