Nigel Birney, Head of Trade Credit at Willis Towers Watson, has said the Northern Ireland economy is showing signs of entering recession and has advised companies, of all sizes, to review their contingency plans, particularly those in the manufacturing and construction industries.
Firms which have deep and complex supply chains are potentially more vulnerable to the risk of bad debt and the wider implications of a weak local economy. Small businesses in particular are at risk when the economy is in a pronounced slump. Protective measures like Trade Credit Insurance can act as protection against business failure of a key customer.
The latest monthly PMI (Purchase Managers’ Index) figures released by Ulster Bank show that business activity in Northern Ireland is at its lowest in seven years. New orders are continuing to fall, key sectors like construction and manufacturing are contracting at record rates, and firms have reported serious concerns about the regional economy.
Nigel Birney said: “We saw earlier this year that Trade Credit Insurance policy payouts have hit a ten-year high in Northern Ireland. Coupled with Brexit uncertainty and the contracting of the wider economy, this strongly suggests that major economic downturn is right around the corner. Key industries like construction, retail and manufacturing, which are absolutely crucial to Northern Ireland’s economy, are showing worrying signs of contraction and decline.”
“Major shocks to Northern Irish manufacturing giants like Harland and Wolff and Wrightbus earlier this year must act as a shot across the bows to other companies in NI. As we move into the new year, firms must take heed of these warnings. No company is too big to fail or too small to not be able to afford not to take the necessary measures to protect against economic volatility and uncertainty.”
He added: “I particularly urge those businesses which fall into the SME bracket here to insulate themselves against economic upheaval and decline. Small businesses make up the backbone of our local economy – over 80% of NI businesses are SMEs – but they are more vulnerable and exposed to the potentially catastrophic impact of insolvencies and bad debt. I would urge all businesses, big and small, to either implement contingency plans or review their existing credit control procedures and consider incorporating Credit Insurance immediately.”