While businesses continue to trade and many are investing in people, they are doing so in an increasingly challenging environment.
Growth in Northern Ireland’s economy “remains weak and uneven”, a new report from the NI Chamber has said.
In the run-up to the US and Israel’s war with Iran which has raised energy prices and pushed inflation figures worldwide, Northern Ireland was “holding up but failing to build sufficient momentum to support stronger growth”.
The Quarterly Business Insights report from NI Chamber and Queen’s University Belfast did say that while most key indicators remain “marginally positive”, meaning slightly more firms report improvement than deterioration, margins “remain narrow and have not strengthened”.
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Around 72% of firms surveyed for the report describe some level of profitability, indicating that most businesses remain in positive territory, however this is largely driven by moderate rather than strong performance.
Suzanne Wylie, chief executive of NI Chamber, said that while businesses continue to trade and many are investing in people, they are doing so in an increasingly challenging environment.
“This report confirms that even before the recent escalation in the Middle East, businesses in Northern Ireland were operating in a fragile, low-growth environment,” she said.
“We stand ready to work in partnership with the UK Government to best understand and support businesses through this challenging period.
“At the same time, the Northern Ireland Executive must not lose sight of the long-term structural issues firmly within its control, starting with putting Northern Ireland on a credible path to financial sustainability through a comprehensive review of public spending.
“At the same time, we urgently need progress on the long-standing barriers to growth that continue to hold back investment, particularly skills, planning, and wastewater capacity constraints that are preventing development right across Northern Ireland.”
She added: “Businesses want to see an agreed, long-term economic plan that provides clarity, certainty and direction, and which we can all get behind.”
The report found only 10% of firms reported high profitability in the first quarter of 2026 while the largest share (44%) reported moderate profitability, pointing to an environment where firms are trading, but not strongly.
Cost pressures remain firmly embedded and price balances are still clearly positive across manufacturing and services, indicating continued cost pass through, particularly for labour costs, and as a result, margins remain under pressure despite broadly positive activity indicators, it found.
The report further highlights that business confidence remains positive but eased slightly in Q1 and investment intentions are positive but cautious.
Recruitment activity strengthened in the first few months of the year but the report says this is not translating into stronger employment growth.
Recruitment difficulties are extremely elevated, with 100% of manufacturers and 77% of services firms reporting difficulties in filling vacancies.
Richard Ramsey, professor of practice at Queen’s Business School, said results from the first part of the year “point to an economy that is proving resilient, but where weak demand, persistent cost pressures and severe labour market constraints continue to limit momentum”.
“Northern Ireland’s relative UK performance increasingly reflects resilience rather than strong growth,” he said.
A total of 180 businesses responded to the Quarterly Business Insight Survey for Q1 2026, representing almost 41,000 employees across Northern Ireland.
A UK Government spokesperson said: “We have the right plan for building a stronger and more resilient economy.
“We are cutting the cost of living, and creating the conditions for growth and investment in every part of the United Kingdom.
“Northern Ireland is directly benefiting, with this Government investing a record £19.3 billion settlement, with almost £390 million in additional funding to the Executive over the Spending Review period, including £231 million in 2026-2027.
“This is money the Executive can use to deliver transformation of public services, fiscal stability and economic growth.”
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