Northern Ireland Businesses Adapting to the Protocol, But Not Staff Shortages

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The view of manufacturers is that it is the lack of people rather than the Protocol which is causing the biggest strain.

It is staffing shortages as opposed to the post-Brexit Northern Ireland Protocol that that is bothering businesses in Northern Ireland, according to a new survey.

A report from Manufacturing Northern Ireland says less than 1 in 7 Northern Ireland firms now say the Protocol is their biggest challenge.

Above: Current experience of the new processes.

The survey finds almost 60% of manufacturers reported that access to labour is now their biggest issue with 80% ranking this as the number 1 or 2 problem.

The findings come as the EU and UK restart negotiations on amending the Protocol, with a view to make it easier for firms to maintain trade links with the rest of the UK.

The findings also hint that pressures on the UK to radically alter the Protocol can ease.

The UK has threatened to trigger Article 16 of the protocol in order to unilaterally override elements of the agreement that are deemed offensive; the EU has threatened to retaliate to any such move.

For foreign exchange analysts the prospect of heightened EU-UK tensions over the issue are considered a potential source of weakness for the Pound in 2022.

Manufacturing NI says the country's economy has lost a third of its EU migrants since the EU referendum in 2016 and the usual flow of people arriving in NI to work has virtually stopped during the pandemic.

The labour shortage reflects similar shortages experienced right across the United Kingdom and is one reason why markets are anticipating the Bank of England to raise interest rates again in February.

"We also know that there are fewer people of working age coming onto the labour market in this and the decades to come," says Manufacturing NI.

"Without labour businesses cannot generate the income required to invest in automation. It is clear that the NI Executive and UK Government must find a way for firms to access people, even on a temporary basis," it adds.

Above: GB Suppliers Performance.

A total of 1,115 positions at firms were vacant from the 163 survey responses.

The survey finds 23.9% of responding businesses continue to struggle with the new requirements governing trade between Northern Ireland and the rest of the UK, but this is significantly down from 41.3% when surveyed in July and April.

More than two thirds experienced no impact and said they are on top of the issues or see them resolving soon.

"This demonstrates that as firms become more experienced, or adjusted, they believe issues do not impact negatively on their business," says Manufacturing NI.

The UK implemented the long-delayed EU import regime at the start of the year, and this could pose challenges to Northern Ireland businesses in 2022.

"With GB import controls now beginning to be implemented, it could be the case that as more GB traders are exposed to and become experienced in customs formalities that more GB firm may be willing to send goods to NI," says the report.

Manufacturing NI says the EU does need to address issues relating to EU goods entering Northern Ireland via Great Britain.

The Protocol provides for EU goods to freely circulate to Northern Ireland, but the survey finds many firms report that EU origin goods distributed to Northern Irealnd via Great Britain "are not freely circulating as promised".

"The EU must find a way for these goods to maintain their economic origin en route to NI," says Manufacturing Northern NI.

One interesting finding is that there is a significant rise from 6.4% to 20.4% of businesses reporting they’ve had an increase in business with Great Britain as a result of the Protocol.

"This tells us that the confusion around the status of NI goods and unfettered access in early 2021 has reduced, and that GB customers are increasingly looking at NI to supply them as supply chains in GB become strained under the new Brexit import requirements," says Manufacturing NI.

"Manufacturers are natural problem solvers and the survey respondents have provided evidence that they are overcoming issues and those who can are increasingly grasping opportunities presented by NI’s unique status by picking up more business in GB and in the EU," it adds.