While businesses in Northern Ireland remain resilient, firms continue to face sustained cost pressures, particularly from wages and taxation. A report published today (Wednesday) by NI Chamber and Queen’s University illustrates that while overall sentiment remains cautiously positive, confidence has moderated since early 2025. Many businesses are maintaining operations and employment despite tightening margins and weaker cashflow.
Business conditions in Northern Ireland weakened somewhat in Q3 2025, with more firms reporting increasing strain. Just over half (52%) of businesses say activity or demand has weakened compared with three months ago, while nearly a quarter (24%) are now under clear financial pressure, the highest proportion since early 2023.
Although the share of firms trading well has edged up to 37%, more are now just covering costs or struggling to break even (24%), suggesting that while overall trading levels remain steady, the underlying financial resilience of some businesses is deteriorating.
Rising wages, tax, and input costs continue to squeeze margins, leaving limited capacity to absorb further increases or invest for growth. After signs of easing earlier in the year, the number of firms reporting weaker demand and tighter finances has ticked upward again, signalling a more cautious mood.
Confidence, investment and cashflow
Business confidence remains positive but below pre-pandemic highs. Manufacturers show stronger turnover expectations (+53%) than services (+28%). Profitability confidence is also positive, though tight margins continue to weigh on sentiment.
Investment intentions remain stable. They are positive for manufacturing and marginally negative for services, signaling that firms are maintaining activity rather than expanding. Training investment is holding firm, especially in manufacturing, as businesses prioritise upskilling to address ongoing skills shortages.
Cashflow balances for both manufacturing (-2%) and services (-5%) remain weak and are both negative in Q3 2025. Despite some modest quarter-to-quarter fluctuations, neither sector has managed to sustain a positive cashflow balance since 2022.
Prices and costs
Price rise expectations have eased slightly across both the manufacturing and service sectors. Labour costs (+89% manufacturing, +87% services) continue to dominate internal pressures, followed by raw materials and utilities. For both sectors, Northern Ireland ranks first across the UK regions in terms of the share of businesses citing labour costs as a key challenge.
Inflation (+66% manufacturing, +62% services) and business taxation (+51% manufacturing, +64% services) remain the top external concern cited.
Recruitment and vacancies
Recruitment activity remains robust, with +80% of manufacturers and +69% of services firms attempting to recruit during Q3 2025. However, recruitment difficulties persist at high levels with 84% of manufacturers and 75% of services businesses reporting challenges finding suitable candidates.
The report highlights a structural mismatch between workforce capabilities and business needs in Northern Ireland - an issue which is constraining productivity and growth in the region.
Hard-to-fill vacancies remain a challenge for 78% of businesses, particularly for leadership and technically skilled roles. Firms also report shortages in sales, finance, digital, and operational areas, demonstrating that skill gaps affect both strategic and day-to-day functions.
Additional questions on aspects of competitiveness
Places for students from Northern Ireland in local universities are limited due to a financial control known as the Maximum Student Number (MaSN) cap. The survey indicates that awareness of that cap is low, with only around one in three survey respondents (36%) familiar with it.
Among those who are aware of the MaSN cap, 38% are taking action to address the deficit it creates, with 21% expanding apprenticeships or training and 15% relocating roles outside of Northern Ireland.
When asked, a majority (82%) of businesses surveyed said they support a renewed conversation between the UK government and the NI Executive on lowering Corporation Tax in Northern Ireland. Many see this as a lever to boost competitiveness and attract investment, with some referencing it in addition to Northern Ireland’s dual market access to the UK and EU.
However, firms stress that reform should be part of a broader competitiveness strategy which also includes investment in skills, R&D, and infrastructure. Respondents cited fiscal constraints and political uncertainty as key barriers to progress.
Commenting on the findings, Suzanne Wylie, Chief Executive NI Chamber said:
“Ahead of the Autumn Budget, the high cost of doing business continues to create a cautious yet resilient business environment. And whilst in relative terms, it is encouraging to report that Northern Ireland has recently been outperforming the UK average across many indicators, business conditions have weakened somewhat this quarter, with ongoing pressure on operating margins and limited financial headroom available to many firms.
“Members are eager to see government follow through on commitments which will help boost growth and Northern Ireland’s competitive proposition. This is evidenced by the overwhelming majority who support the restarting of the conversation on corporation tax between the Executive and UK government. There is a clear desire to reduce costs, and create a new growth story underpinned by an ambitious long-term economic strategy.”
Professor Sir Ian Greer, President and Vice-Chancellor, Queen’s University Belfast added:
“These findings underscore both the challenge and opportunity facing Northern Ireland's economy. With businesses showing resilience, manufacturers expecting strong growth and our region outperforming on exports, there's clear demand for the skilled graduates we produce.
“A triple helix approach based on partnership between government, industries and Further and Higher Education providers, which prioritises skills, R&D, and infrastructure investment, is the key starting point for sustained and sustainable inclusive economic growth in Northern Ireland. We need government, industry, and universities working together, aligning policy frameworks like the MaSN cap with economic need, deepening industry academic collaboration, and ensuring our talent pipeline matches the ambitions of businesses that are investing in training despite tight margins.
“This is our opportunity to demonstrate that strategic investment in higher education isn't separate from economic recovery, it's fundamental to it.”
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