Covid-19 impact: Business growth stalls North and South

More than half of Irish businesses across the island of Ireland are now in decline, new research reveals. Is digital technology the answer?

Prior to Covid-19 around 42pc of Irish businesses North and South were in growth mode while those in decline stood at 7pc, according to IntertradeIreland.

Now only 15pc of Irish businesses can claim to be in growth mode while those that are in decline have jumped to 53pc.

“It is also important not to lose sight of the fact that Brexit is another once in a generation issue that is looming on the horizon”

The latest results from InterTradeIreland’s Business Monitor (Q2 2020) make for stark if unsurprising reading. It quantifies and puts into perspective the massive disruption and strain caused by Covid-19 across the island.

The dizzying speed of contraction is unprecedented and points to the rapid action needed to help combat the transmission of Covid-19, the North-South body has warned.

Both governments in Ireland and Northern Ireland have put in place unprecedented support packages for firms to address the difficulties that SMEs are facing.

“Before Covid-19 struck, the growth in cross-border trade was helping to significantly boost productivity and profitability in both jurisdictions,” said Aidan Gough, designated officer, InterTradeIreland.

“We have a wide range of Covid-19 specific programmes and funding to help cross-border traders get back on their feet and move from crisis to recovery. There has been a lot of interest in our Emergency Business Solutions programme. Firms are offered £2,000 /€2,250 worth of support to risk assess their current business position, assist with cash flow forecasting, HR issues and to help manage suppliers,” Gough warned.

In terms of employment, 23pc of businesses say their staff levels have decreased.

This figure is reminiscent of the Business Monitor’s results in Q4 2009, when the island was gripped by recession.

The immediate economic shockwave caused by Covid-19 is having a similar impact in the short-term on jobs as the ’08/09 downturn on the island. In addition, the effects of the pandemic are being felt right across the globe, with no economy immune.

Digital divide

Infographic showing impact of Covid-19 on Irish businesses.

As Covid-19 touches every aspect of economic life, it has hastened the adaption of certain technologies and practices, however there is a risk that smaller businesses could be left behind.

The Business Monitor illustrates that there is a digital divide between larger firms and micro SMEs that Covid-19 has exposed. 70pc of firms with less than ten staff say that employees have no access to emails or company files and documents. For larger firms this drops to 37 per cent.

“There is a recognition from policy makers that SMEs need to be digitally enabled to meet the demands of this new environment,” said Gough.

“InterTradeIreland’s E-merge programme can assist cross-border SMEs to develop and improve their on-line sales and e-commerce solutions to allow them to continue to compete and explore new opportunities.”

In terms of remote working Northern Ireland is further behind Ireland, with 18pc of staff working from home compared to 41pc of employees in Ireland. For businesses that trade across the border, 38pc of staff are working from home.

The firms surveyed recognise the need to grow their digital skills base with over one in ten indicating they needed to enhance their abilities in this area. For the first time, risk-assessment skills were also identified as in-demand, with 22 per cent of companies indicating they need to increase talent in this area.

InterTradeIreland’s Business Monitor also does highlight the resilience of firms across the island, with 73pc of firms reporting they are planning to re-hire staff. In terms of the biggest barriers to recovery, SMEs citied maintaining social distance with customers (41pc) and the ability to provide service in a way that is profitable because of social distancing (34pc). This was most marked in the leisure hotel and catering sector (69pc) but it is an issue for just under a third of professional service firms (31pc).

Brexit also remains a huge challenge, with the number of businesses that have made plans standing at only 14pc and 30pc for cross-border traders. Of those companies that have made preparations, over a third (37 per cent) say they will now need to revise their plans in light of Covid-19.

“Businesses have been focusing on surviving and directing resources to adapting to the new landscape caused by Covid-19. However, it is also important not to lose sight of the fact that Brexit is another once in a generation issue that is looming on the horizon.

“If there is anything that Covid-19 has shown us, it’s the importance of assessing risk and responding properly. We know that businesses have remarkable resilience, but it’s important not to be complacent around Brexit. InterTradeIreland has a number of supports and resources in place to help SMEs mitigate risk and adapt to thrive in a post-Brexit world,” Gough warned.

Written by John Kennedy (

Published: 4 August, 2020