Business news in Northern Ireland: January 2014

Posted on January 19, 2014 · Posted in Business Month

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House prices in Northern Ireland will rise 4% in 2014, predicts the Royal Institution of Chartered Surveyors.  UK house prices are expected to rise 8% and London’s 11%.

 

Down

 

Inflation fell from 2.2% in October to 2.1% in November, marginally above the Bank of England target rate of 2%.

 

Factory gate price inflation was just 0.8% in November, having exceeded 5% in late 2011.

 

Claimant count unemployment in Northern Ireland fell in November to 6.7%. It is 3.8% in the UK. Using a broader unemployment measure, the rate in Northern Ireland increased to 7.4% in November.

 

Retail footfall in Northern Ireland was down 6.3% in November on the same month in 2012, the worst performance of any UK region.

 

Retail vacancy rates rose in Northern Ireland in the quarter ending December to 18.5%, the highest rate in the UK.

 

NI performing strongly in knowledge economy

 

Northern Ireland is outperforming the rest of the UK in growing the knowledge economy, according to the Knowledge Economy Index.  Northern Ireland is doing well in terms of the sector’s employment levels, business start-ups and venture capital investments.

 

In the last three years, there has been a 20% growth in knowledge economy activity in Northern Ireland, with 295 new innovative start-up businesses formed and a 6.2% rise in employment in the sector, compared to a 2.5% increase in the UK as a whole.

 

NISP Connect director Steve Orr said: “Typically, jobs in the knowledge economy pay 25% more than the average wage and the more growth we see in this sector the greater the ripple effect across NI.  The investments being made by DETI and delivered by Invest NI and other economic support organisations, including NISP Connect, are evidently working.”

 

But Richard Johnston, associate director of NICEP – the Northern Ireland Centre for Economic Policy – warned: “Whilst there is much positive news within the report, there is no room for complacency. We must acknowledge that the knowledge economy in NI has grown from a low base and there is still some way for us to go to catch up with the UK.

 

“We should also be cognisant of the fact that all other UK regions are striving to grow their knowledge economies and we should not underestimate the scale of the challenge.”

 

The Knowledge Economy Index was commissioned by NISP Connect and produced by the Northern Ireland Centre for Economic Policy at the University of Ulster in conjunction with Oxford Economics.  NISP Connect is a not for profit body that promotes the development of the knowledge economy and is based at the Northern Ireland Science Park.

 

Evermore

 

The UK’s Green Investment Bank has made its first investment in Northern Ireland, enabling the Evermore Renewable Energy plant to go ahead at the Londonderry Port.  The Green Investment Bank and its commercial partner the Foresight Group have provided £20m towards a total investment of £81m in the project.

 

Evermore will be fuelled by biomass, increasing renewable electricity generation in Northern Ireland by 10%.  It will be the biggest renewable energy operation in Northern Ireland when completed in 2015.

 

Some 200 jobs will be created in the construction phase on the ten acre site.  Overall funding for the project has involved a broad partnership of specialist investment firms, drawing finance from Scandinavia as well as the UK.

 

Stobart Biomass won the 15 year biomass supply contract and will provide the plant with over 115,000 tonnes of recycled wood a year throughout the period.  Stobart expects to generate revenues of £75m over the life of the contract.

 

Co-founders of Evermore, Ciaran and Stephen Devine, said: “We are making a serious commitment to the Northern Ireland energy market. Working with the best partners in technology, fuel supply and financing, we hope to show that Northern Ireland is a great place to do business so that further inward investment will follow.”

 

Shaun Kingsbury, chief executive of the UK Green Investment Bank, said:  “[Evermore] will substantially increase Northern Ireland’s renewable energy capacity.  Not only will the project save the same amount of carbon as taking around 77,000 cars off the road, it will also make use of over two million tonnes of wood, a valuable energy resource that would otherwise have gone to landfill.

 

“Our mission is to crowd in private sector capital, so I’m especially pleased to see that every pound of GIB investment brought in more than £3 of private funding.”

 

Media law firm heads for Derry

 

International media law firm SmithDehn LLP is negotiating with Invest NI, with the intention of creating a legal hub in Londonderry.  The office would service media lawyers around the world and will be supported by a new media law course to take place at the University of Ulster’s Magee campus in the city.

 

Russell Smith, a US partner in SmithDehn, is to lecture at Magee’s new Masters level short course on media law.  Two senior lawyers at film production company HBO – makers of Game of Thrones – will also lecture on the course.  Ulster’s School of Law is aiming to tap into the demand for more lawyers with expertise in media, entertainment and sports law.

 

Dr. Eugene McNamee, head of the Law School, said: “Partners from SmithDehn already have made multiple trips to the campus and they’ve interacted with dozens of law students here. The American lawyers told me they were very impressed with the energy, intelligence, and enthusiasm of the potential recruits available here.”

 

SmithDehn clients include HBO, Sony, Paramount, the Discovery Channel and Channel 4.  The firm intends to open an office in Derry, providing legal expertise to the firm’s offices globally.  The office would employ 75 staff, but this is subject to the completion of negotiations with Invest NI and the Department for Employment and Learning.

 

The media law course will begin in February, with applications from law students and graduates required by 10 January.

 

‘Careers advice in NI is failing’

 

Young adults and teenagers in Northern Ireland are being failed by careers advisors, according to survey information collected by Barclays Bank’s LifeSkills programme and the CBI.  All young people in Northern Ireland surveyed in the programme felt they were not provided with all the information they required to make informed choices on their future careers.

 

The survey found that young people typically only receive guidance on how to pursue traditional career progression, with a focus on A level options and going to university.  Careers advice usually ignored apprenticeship and vocational qualifications, which were only presented as options in 17% and 26% of cases respectively.

 

Gender stereotyping was also identified by the survey.  Young men were 7% more likely to be given advice on apprenticeships, whereas young women were more likely to receive guidance on A level and university options.  LifeSkills points to only a third of young people in the UK choosing vocational career approaches, compared to over two thirds in more successful European economies, Germany and Austria.

 

Kirstie Mackey, head of Barclays: LifeSkills, said: “LifeSkills was set up to remove the barriers young people face in moving from school to work. The results of this research underline the challenge that still remains to ensure young people have access to the necessary skills and experience to help them make informed career choices.”

 

Nigel Smyth, director of CBI Northern Ireland director, said: “The quality of careers advice in our schools must be improved and CBI Northern Ireland believes that every child should have the statutory right to have access to impartial and individually tailored advice from DEL Careers Advice at year 10 and year 13.”

 

Belfast is NI’s dominant tourism destination

 

Belfast and the Causeway Coast were Northern Ireland’s main tourism destinations in 2012, according to the first localised tourism statistics, which have just been produced by the Northern Ireland Statistics & Research Agency.

 

More than a quarter of all overnight stays in Northern Ireland away from home were in Belfast.  The Coleraine council area – which includes part of the Causeway Coast – had the second largest share of overnight stays in 2012, at 12%.  Down and Fermanagh also scored highly.  Figures for 2013 will not be available for some time.

 

There is a significant difference between Northern Ireland residents and outside visitors in terms of destinations.  Belfast, Derry and Coleraine are the most popular destinations for external visitors.  While most overnight stays in Derry were from people who live outside Northern Ireland, the vast majority of visitors to Strangford and the Mournes who stayed overnight were Northern Ireland residents.

 

Belfast receives almost half of all visitor spend, from both Northern Ireland and outside overnight stays.  The statistics also show a big increase by Northern Ireland residents in day visits within NI.  These rose by 17% in 2012, over 2011.  This suggests that the recession may have persuaded many people to replace overseas holidays with local day trips.

 

More recent figures produced for the global tourism body UNWTO show that international tourism revenues grew by 5% in the first quarter of last year.  An additional 41 million visits were made by tourists in that quarter, with a total of 845 million visits.  Growth was spurred by a substantial increase in tourists from Russia and China.  China is now the largest source market and is also growing as a tourism destination.

 

Europe remains the most popular destination for international travellers, with Eastern and Central Europe and Southern Europe both growing by twice the global average in the first quarter of 2013.

 

Housing Benefit costs increase

 

The recession and the shortage of homes for rent have led to an increase in claims for housing benefit.  Private sector housing rent increases have significantly outstripped the rate of inflation.

 

The National Housing Federation says that over £12bn has been paid out in housing benefit in the UK since 2009, representing a substantial burden on taxpayers.  It forecasts that rents in England will rise by 20% by the end of the decade.

 

In Northern Ireland, £636m was paid out in housing benefit in the 2012/13 financial year, of which over £400m was paid to private sector landlords and housing associations.  This represented a 4.8% cost increase, with a 3% rise in the number of people receiving housing benefit.  Housing benefit is paid for 73,000 homes in the private sector, nearly 70,000 homes owned by the Housing Executive and 25,000 owned by housing associations.

 

In Britain, about one in five people in receipt of housing benefit is in work but on low pay.  The majority of new housing benefit claimants are in work, with many moving from unemployment into low paid jobs.

 

The issue of low pay is emerging as a worsening problem, with average incomes failing to keep pace with inflation in recent years.  Incomes in real terms – taking account of the impact of inflation – have fallen more severely in Northern Ireland than in the rest of the UK.  Median average pay in Northern Ireland is around £55 a week less than in the UK as a whole.

 

Economic inactivity strategy launched

 

A new government strategy has been launched to tackle economic inactivity, which is far higher in Northern Ireland than in any other UK region.  Around 562,000 adults of working age in Northern Ireland are economically inactive – neither working, nor registered unemployed and seeking work.  This is a rate of 27.4%, compared to 22.1% in the UK as a whole.

 

The Executive’s economic inactivity strategy aims to increase the employment rate here to 70%, up from the current 67%, by 2023.  It is currently 72% in the UK.

 

To achieve the 70% rate, 30,000 jobs will need to be created in the next nine years.  The strategy includes improving access to training programmes, assisting people who are economically inactive to engage with the labour market, increasing job opportunities and addressing barriers to employment.

 

Enterprise minister Arlene Foster and employment minister Stephen Farry launched the strategy.  Minister Foster said:  “In recent months, there have been encouraging signs which indicate the Northern Ireland labour market is recovering following the recession. However, high levels of economic inactivity have been a persistent feature of the local economy over the past 30 years regardless of changes within the economic cycle.”