Eighty-five per cent of all registered businesses in the Fermanagh and Omagh District Council (FODC) area are micro businesses, many of which do not survive past five years.

This fact was discussed during a business seminar called ‘Shaping the Local Economy’, which heard a presentation from Dr. Eoin McGuinness, Senior Economist at the University of Ulster’s Economic Policy Unit.

He told the audience of local council officials and business people: “There is a lot of business churn in Fermanagh and Omagh; businesses are formed but are not making it past five years. Is it down to the costs of doing business here? Is there support to get into other markets? Is it about availability of staff?”

He said: “We’ve got starting up well cracked – what are business needs in years two-five? Across NI we have lots of businesses which have no problem making their first million; it’s about surviving and scaling up.”

The meeting also examined the Council’s 2016-2019 Economic Development Plan for the region which recognises the trend of ‘business churn’. The 18 page booklet outlines the Council’s aim to grow existing businesses and further diversify the local economy by: enhancing the support of business start-ups; providing mentoring support for established companies which have identified potential growth in a range of areas; assist local businesses to avail of emerging regional supply chain opportunities; developing key clusters in strategically important sectors including construction, ICT/digital, sustainable energy and tourism and using the local diaspora to attract foreign and direct investment into the area.

A question and answer session following Mr. McGuinness’ presentation heard concerns about the lack of Foreign Direct Investment in the Fermanagh area and the difficulty faced by the South West College in “getting students through the door” because “the schools want to hold onto them.”

With Brexit looming and continued uncertainty as to how that will impact the UK and Ireland, Mr. McGuinness outlined three potential scenarios: “Brexit goes well and growth goes upwards; we muddle through and UK growth continues to stagnate or dips off and inflation goes up; or we go off the cliff and growth collapses, unemployment soars and inflation goes back again.”

He predicts that “muddling through is the more likely scenario.”

Mr. McGuinness noted that the Republic of Ireland is currently booming which is good news for border areas, however, Brexit is expected to taper off growth in ROI by 2019. Mr. McGuinness stated: “If Brexit doesn’t go badly wrong, the north will avoid recession but growth will be very flat. If there is a hard Brexit, NI could lose 8,000 jobs.”

In advance of Brexit, he advised that “what we can do here locally is much more important and makes it much more important to drive through on our targets around business starts, skills and employability.”

Within Fermanagh and Omagh, 1,300 additional jobs are forecast in the next 10 years, increasing employment to 53,700. The region will not return to 2008 peak employment until 2026 and self-employment is expected to increase by 300 (from 9,700 in 2016 to 10,100 in 2026.)

He advised FODC that their Economic Development Plan must take note of the following challenges:

  • The NI fiscal deficit (around £10 billion). “We are spending more than we are getting in. We need to close that gap through growth,” Mr. McGuinness said.
  • Hidden labour market weaknesses: “Of the 61,000 net new jobs created in Northern Ireland since 2012, a lot of those are males going into part time employment in agriculture and construction. Of the 54,400 jobs in the FODC Council area, 8,808 are in the agricultural sector, including self-employed farmers. What does that mean for household incomes and for those sectors?” he asked.
  • Productivity. “In ROI it takes four-and-a-half days to make a ‘widget’. In Germany it takes five days, in the UK it takes six days and in NI it takes seven days. The reason for that is the quality of our firms, the amount of investment our firms are making and the supports they are putting into helping the management of their firms. If you look at the key local firms, they have a strong management team.”
  • NI and UK economies are over reliant on consumer consumption. “We tend to buy more from each other than selling abroad. Can that continue? We have a decade of no wage growth in Northern Ireland and we also have the lowest household income in the UK. We also have a higher level of household indebtedness than other regions in the UK and across the south. There’s a worry there.”

Mr. McGuinness reflected on the fact that Fermanagh and Omagh’s agriculture sector accounts for 12 per cent of total employment. In NI, the agriculture sector accounts for four per cent of total employment, hence the agriculture sector in FODC is eight percentage points more concentrated than NI’s agriculture sector. “There may be a sectoral shift required to develop the economy. That may come from start-ups,” Mr. McGuinness advised.

He also pointed to concerns about how reliant Northern Ireland is on the Republic of Ireland, stating: “More than one-third of NI exports outside the UK go to ROI. Cross-border trade totals €3 billion and is dominated by food and drink which are subject to tariffs.”

He believes that FODC’s Economic Development and Community plans “are well set in the local economy” and commented: “If you are a council or a statutory body, the key in any local development strategy is getting to know your firms. The idea of a forum and business champions would be very important. Go beyond your local chambers of commerce and speaking to the firms themselves. Clustering is mentioned in the strategy too and that’s a good idea.”

He added: “Alignment with the industrial strategy is important. Keeping the foot on the neck of the statutory bodies so they support you will be crucial.”

Councils should “embrace big data more to understand what’s going on in their local communities” and “town and village regeneration is critical to an economic development strategy because people invariably set up firms close to where they were born and bred and they stay there out of local loyalty. People want to live and work in their local community,” said Mr. McGuinness.

He concluded: “As a council you need to look at what level of growth is good for your local area and define what success looks like. An economist could come in and look at your GVA and labour figures but Fermanagh and Omagh has a very strong sense of well-being and non-economic indicators and sacrificing those for economic growth may be a sacrifice not worth making.”