The vast majority of businesses in Northern Ireland (79%) continue to trade well or reasonably, despite numerous headwinds, according to the latest NI Chamber and BDO NI Quarterly Economic Survey.
Significant changes to trading arrangements agreed with the region’s largest export markets (the EU and US) in Q2 25 received a mixed response, with strong calls for clarity on timelines and detail, and for more action on GB-NI red tape.
Over 1 in 5 say it’s too early to say what impact the EU-UK reset will have, but 41% of those who responded to the research believe it will have a positive impact on the NI economy, while 39% are of the opinion it will have a positive impact on the UK economy.
Agreed in May 2025, the deal marks a shift towards a more cooperative UK-EU relationship, enhancing co-operation on trade, food standards, energy, and youth mobility. Perspectives about its impact on individual businesses are more mixed; 24% believe the reset will impact positively while 36% are neutral. 10% believe it will be negative for their business and 1 in 5 remain uncertain.
Members were also asked about the impact of US tariff measures. In response, 21% of respondents said they expect it to have a negative impact on their business, compared to 10% who believe it will impact positively. Businesses with US trade links are notably more concerned, with 34% anticipating negative effects.
Business performance
Most businesses (79%) report generally healthy trading conditions, trading either well (35%) or reasonably (44%) in Q2 2025. Meanwhile, around 21% of businesses were experiencing challenges, with 15% just covering costs and 6% struggling or on the verge of closure.
Manufacturers (48%) are slightly more confident around turnover growth for the next 12 months than Services (42%). Confidence around profitability dipped for both sectors in Q2 25, particularly for Services, after a positive start to the year. The profitability balance remains positive for both sectors, suggesting that on balance, businesses are making profits despite cost pressures.
Just over half (52%) of businesses reported seeing a slowdown in demand in Q2 2025, up from 46% in Q1. Most of this reflects a small slowdown (43%), while 9% report a significant slowdown. After falling to a low of 36% in Q2 2024, the proportion seeing slowdown has been rising steadily over the past year. Overall, the findings suggest more businesses are noticing some softening in demand conditions.
Prices and costs
Rising labour and input costs continue to put upward pressure on prices, posing challenges for margins and competitiveness, with expectations to raise prices remaining relatively high across both the manufacturing and services sectors. In Q2 2025, the balance rose to around 51% for services and remained high at 50% for manufacturing, indicating that significant proportions of firms in both sectors plan to raise prices in the next three months.
Labour costs remain the dominant internal pressure on prices for businesses across Northern Ireland, especially for manufacturers where nearly nine in ten report this as a driver. Raw material prices are also a significant issue for the sector.
Both manufacturers and services businesses continue to cite inflation and business taxation as concerns. For manufacturers, inflation remains top, though easing slightly, while business tax concerns have increased. In services, business taxation has now overtaken inflation as the top concern, suggesting rising apprehension about tax changes. Services firms remain more concerned about business rates and interest rates than manufacturers, and competition is becoming a growing worry, particularly in services where it has risen notably.
Recruitment
Recruitment difficulties remain high across both sectors. While recruitment activity is strong, with 81% of manufacturers and 69% of services firms actively hiring, the proportion reporting challenges in finding suitable candidates rose to 79% for manufacturing and 70% for services. This trend underscores the continued tightness of the labour market across the economy.
Despite these difficulties, manufacturing firms remain optimistic about growing employment, with expectations at their highest in recent years, while services continue a gradual downward trend in employment growth expectations since 2021.
Regional position
Northern Ireland’s regional performance has improved significantly in recent years. NI manufacturing ranked in the top three UK regions for all 11 key indicators in Q2 25. The sector’s strongest position is with confidence in turnover growth and employment expectations. Its weakest is on cashflow and profitability along with export sales. Notably, NI manufacturers rank in the top UK regions in terms of expectations to raise prices, driven by labour and raw material costs.
In services Northern Ireland ranks in the top three UK regions for 5 of the 11 key indicators. This was nine last quarter, suggesting some weakening. The service sector’s strongest regional position in Q2 25 was employment expansion over the last three months, while the weakest included domestic sales, cashflow, export orders and confidence around profitability.
Commenting on the survey findings Suzanne Wylie, Chief Executive, NI Chamber said:
“Once again, our research highlights the tenacity and resilience of Northern Ireland businesses, with 79% continuing to trade well or reasonably despite numerous challenges, including absorbing the cost of the Autumn budget and dealing with protracted uncertainty in international markets.
“However, the mixed responses to recent changes in trading arrangements highlight the need for greater clarity and support. While 41% of respondents believe the EU-UK reset will positively impact the NI economy, concerns persist around ongoing GB-NI trade frictions. Separately, businesses are also uncertain about the implications of proposed US tariff measures, with views on their impact divided and many yet to form a clear assessment.
“Taking all this together with a new trade strategy, a new industrial strategy, and a new trade deal with India, it is imperative that the government provides Northern Ireland’s businesses with clear timelines, detailed information, and robust support to navigate these changes and seize new opportunities.”
Brian Murphy, Managing Partner, BDO NI added:
“No matter what challenges and uncertainties NI businesses have to face, it’s heartening to see that 79% are still trading well and are just getting on with it. This is similar to where we have been in recent years and shows that regardless of the wider economic picture, and no matter what the commentators say, our local firms persevere and succeed.
“Recruitment intentions have always provided a clear indication of business performance and confidence and it is reassuring to see that recruitment activity remains incredibly high, with 81% of manufacturers and 69% of services either currently taking on new staff or planning to.
“In addition, investment intentions around training are positive for both the manufacturing and services sectors, showcasing the ongoing importance placed on staff development by businesses in their efforts to grow.
“Globally, despite the concerns and media coverage about US tariffs and new trading arrangements, we note that nearly 40% of local businesses say this has had no impact, with a further 10% saying it has in fact been positive for their business. Having said that, the concerns of the 21% who have been negatively impacted need to be addressed. Given time, these figures may well fluctuate as our new trading realities become clearer.
“Furthermore, it’s encouraging to see that most businesses see a positive impact on the NI and UK economies as a result of the Trade and Cooperation Agreement ‘reset’ between the UK and EU. This reset will positively influence a more cooperative UK-EU relationship, stabilising post-Brexit trade and political ties and ultimately bringing positive outcomes for the local economy and strengthening the businesses that operate within it.
“Given the positive economic momentum that recent quarters’ results have shown us, it’s clear to me that the all too common spectre of ‘uncertainty’ no longer has the same hold over NI businesses that it used to, and long may this continue. Looking to the future, this momentum can be enhanced even further through collaboration with our elected representatives and other stakeholders. This presents NI PLC with a very unique opportunity, an opportunity that we cannot afford to waste.”
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