Addressing business leaders recently at a local business breakfast hosted by Bangor Chamber of Commerce Alan Bridle said: "While markets remain volatile and react spontaneously to the latest news from the Middle East, the economic and financial consequences are becoming increasingly evident for both businesses and households".
He outlined that although "stagflation" scenarios are being modelled, the current situation is unlikely to be a precise re-run of the period which followed the outbreak of the Ukraine war, which came shortly after the surge of pent-up post-pandemic demand price pressures, and when monetary and fiscal policies alongside the labour market were in a different place.
"Local businesses have also had to absorb a significant policy-driven increase in employment costs since then." he said.
READ MORE: Esri powers increased public safety for Northern Ireland Electricity Networks
Impact on local businesses
Noting that direct exposure of local businesses to the Middle East conflict is relatively small, he suggested that some are already beginning to experience the indirect impacts and second-round effects stemming from disruption at the Strait of Hormuz. "Beyond the immediate pressure of rising energy prices, the impacts on various raw materials and supply chains will likely ripple through sectors, including transport, freight, packaging, insurance, fertiliser and food" he said.
"Overall the magnitude of the cost reset is likely to depend on the duration of hostilities and the durability of any peace agreement. Even if restrictions are eased, the Strait of Hormuz may remain a chokepoint of vulnerability.
"For local firms, costs, profitability and cash flow will potentially be impacted in a number of ways, although the effects will vary significantly by sector depending largely on energy intensity."
Looking ahead, however, Alan said pressure on operating margins may come from a number of sources including lower revenues as higher inflation and a potential economic slowdown weigh on consumer spending and shoppers increasingly look to value brands as household budgets tighten.
"At the same time, businesses face increased input costs from potential disruptions to raw materials, rationing and additional transport costs, and while reorienting toward closer markets may improve supply chain security in the medium term, it may come at the expense of efficiency."
What businesses should do now
To help businesses, Niall Devlin, Head of Business Banking NI, Bank of Ireland is urging companies to take a proactive approach to the current situation and provided some key priorities for businesses to consider:
“In today’s world, geo‑political uncertainty is no longer a distant concern, it’s influencing shaping day‑to‑day decisions of SMEs locally and internationally. Supply chain pressures and cost volatility are real business considerations and for many businesses the challenge is knowing how to strengthen resilience without slowing growth.
“There are steps businesses can and are taking now to protect themselves. Diversifying suppliers, improving cash‑flow forecasting, and building robust scenario plans all help reduce exposure to global shocks. But equally important is making the most of the cash they may already have. We offer a range of business savings solutions, from fixed term to flexible and instant access options, to make cash work harder, which is important in times of wider uncertainty.
READ MORE: Startium Supports 1,000+ University Entrepreneurs in Belgium Through Cross-University Collaboration
“If you’re unsure where to start or want to explore ways to strengthen your business’s resilience, talk to us, we have Business Managers right across Northern Ireland who are ready to help you protect, grow and achieve your business ambitions.”
Concluding his remarks, Alan Bridle said: "We might take reassurance in the knowledge that local firms have demonstrated a resilience to repeated shocks over the past decade and will have muscle memory and a playbook to call upon from recent other crises."
For more details of how Bank of Ireland can help business customers navigate the changing landscape visit https://www.bankofirelanduk.com/business/.
Read the Spring 2026 edition free online →
Stay connected with NI's tech community:
