Brexit is driving up prices in Northern Ireland at the same time as the local economy contracts as a result of lockdown restrictions.
That is one of the findings of the latest PMI report from Ulster Bank which showed firms across the region saw the highest rate of input cost inflation of all 12 UK regions in January.
That was put down to higher shipping costs by respondents to the survey, as well as higher raw material and transport costs linked to the new Brexit arrangements which began on 1 st January.
Because of the increase in costs, companies in Northern Ireland have hiked the price of their goods and services at the fastest pace since October 2018.
Meanwhile, the province – like all over UK regions - was also subject to falling output, orders and employment, particularly in manufacturing, and construction which all posted their fastest rates of decline since May last year.
The latter sector has had a particularly difficult time with activity and new orders plummeting. As a result, construction firms are the most pessimistic about the year ahead.
Richard Ramsey, Chief Economist at Ulster Bank in Northern Ireland, said 2021 has been the year of the rollout.
“The rollout of the vaccine will be the single biggest factor driving economic performance later in the year,” he said. “Meanwhile, the rollout of red tape linked to the new Brexit arrangements will hinder Northern Ireland’s economic recovery by adding costs to business and restricting trade.
“While Northern Ireland has the advantage of remaining within the EU’s single market for goods, it finds itself on the wrong side of a regulatory sea-border which has effectively redrawn the map of the UK’s single market and customs union.”
