Northern Ireland’s economy has been performing strongly in recent years, outperforming the rest of the UK, but the conflict in the Middle East will prove a major test of its resilience. In the 12 months to Q3 2025, Northern Ireland’s economic output grew by 2.9 per cent – more than double the 1.3 per cent recorded across the whole of the UK, assisted to a significant degree by the capability and strength of its logistics industry. In an era where growth anywhere in Europe is increasingly hard-won, that performance is significant. However, when the systems that keep the real economy moving are disrupted, as they have been since the start of this war, the impact can be felt quickly. Sustaining Northern Ireland’s growth will depend on working together to remain as resilient as possible.

Disruption of the Strait of Hormuz is affecting the movement of key oil supplies, which will keep pushing up fuel prices. In addition, flights are being cancelled and concerns about the safety of navigating through the Suez Canal are already changing shipping routes, with vessels diverting around the Cape of Good Hope and adding up to two weeks to Asia-Europe journeys. While the logistics sector is highly adaptable, moving some cargo to air freight for example, these pressures inevitably ripple through supply chains. Longer routes, higher insurance premiums and more expensive fuel ultimately affect businesses and consumers alike, not least because logistics businesses operate on very low margins and do not have the buffer to absorb additional costs of this magnitude. Fundamentally, it is a reminder that economic growth does not happen in isolation: it relies on complex networks of infrastructure, trade and logistics continuing to function smoothly as well as consumer and supplier confidence.

Minimising the impact on NI

So, in this context, how do we keep the economic impact of the Middle East conflict as low as possible? First, we must understand what has been going well and why. Northern Ireland’s economic progress has not been driven by a single boom sector or one-off intervention. It has been broad-based, supported by firms that make, move and sell goods, by people adapting to changes in the workplace, and by an economy that has remained outward-looking despite a difficult global backdrop. In short, it has depended on the practical foundations of the real economy working effectively.

However, these foundations cannot be taken for granted and, in a world of instability, maintaining and strengthening them will be key to resilience. A critical consideration is Northern Ireland’s unique position within both the UK and the wider European marketplaces, which offers a genuine competitive advantage. Access to both the UK and EU markets is something many regions would envy. But that benefit only translates into higher output, better jobs and rising living standards if it works in practice for businesses of all sizes.

Infrastructure also remains a central part of the picture. Efficient road, port and rail networks are not abstract ambitions for the future: they are essential conditions for growth and resilience. Delivering projects such as the York Street Interchange, the A5 and the Newry Southern Relief Road, upgrading the A1, and ensuring a meaningful role for rail freight are all increasingly important if Northern Ireland’s economy is to continue on its upward trajectory. The Northern Ireland dimension is also one of the reasons we are asking the government to postpone the 5 pence rise in fuel duty scheduled to start in September, which will impact on every business and consumer in Northern Ireland and across the UK.

Skills matter just as much. Employers across Northern Ireland continue to report difficulties accessing the workforce they need, particularly as technology evolves and the transition to net zero accelerates. Ensuring that skills policy reflects the needs of the real economy, and that businesses see a fair return from the Apprenticeship Levy they contribute to, will be vital to supporting long-term expansion.

At the same time, the transition to a lower-carbon economy must be managed in a way that supports supply chains rather than inadvertently undermining them. Logistics businesses are already investing and want to decarbonise, but they can only do so at scale if the necessary fuels and infrastructure are available and affordable. This is particularly relevant in Northern Ireland, with around 90 per cent of its goods moving by sea and plans being discussed to extend the UK Emissions Trading Scheme (UK ETS) to these ferry routes, risking increasing freight costs without meaningfully accelerating maritime decarbonisation in the short to medium term.

Northern Ireland’s recent performance shows what is possible when the fundamentals of the real economy are working well. With the conflict escalating in the Middle East, it would be easy to assume that all our economic planning has been thrown into the air, but it is not necessarily the case. While conflict of course brings new demands for expenditure, it should also focus our attention on strengthening the fundamental foundations of domestic economic growth and resilience. Logistics is one of those fundamentals, as nothing moves without it.

Ben Fletcher, Chief Executive of Logistics UK

Logistics UK is one of the UK’s largest business groups, with over 22,000 members, spanning road, rail, waterways, sea and air freight, in ports, airports and warehousing, as well as the customers of freight services such as retailers and manufacturers. Its mission is to support, shape and stand up for safe, sustainable and efficient logistics.