Northern Ireland's economy will be UK's slowest grower in 2017 and 2018 says PwC outlook
THE Northern Ireland economy is recovering - but at a snail's pace compared to every other region of the UK.
And with inflation set to reach 3 per cent in the next year, the situation is likely to worsen, contributing to a slow down in jobs growth and a further squeeze on household spending power.
The figures - contained in business consultant PwC's latest UK Economic Outlook - also point to domestic domestic spending on housing and utilities rising to close to 30 per cent by 2030.
According to PwC's projections, the north's economy will grow by 1.2 per cent in 2017 compared to UK average of around 1.5 per cent and by just 0.9 per cent in 2018.
In both those years Northern Ireland will lag behind ever other UK region.
David Armstrong, PwC partner in Northern Ireland, said the forecasted slowdown in overall UK growth in 2018 was attributable to an overall downturn in business investment driven by continued uncertainty surrounding the negotiations to leave the EU.
"We also expect a softening of jobs growth and a squeeze on real household spending power from rising inflation, which could reach around 3 per cent in 2018," he said.
“But somewhat stronger net exports, helped by the weaker pound, should dampen the scale of the fall in overall GDP growth this year.
“Considerable uncertainties remain around any medium-term economic conditions however, so Northern Ireland businesses should stress test their business and investment plans against alternative economic scenarios and also review the potential wider implications of Brexit for all aspects of their business."
He added: “The welcome news is that Northern Ireland and the UK in general look set to avoid recession, but a combination of the current political situation, uncertainty over the region’s budgetary position and a lack of clarity around a post-Brexit border, may influence investment decisions.”
PwC says consumer spending growth is projected to drop to around 2 per cent this year and 1.7 per cent in 2018, and the picture for household costs in the longer term isn't encouraging, with just under 30 per cent of the household budget on housing and utilities by 2030, up from 25 per cent in 2016.
Spending on financial services and personal care services will also tend to increase relatively rapidly over time, while the share of total spending on food, alcohol and tobacco, and clothing will tend to decline in the long run, PwC says.
Meanwhile the report also claims jobs will change rather than disappear over the next decade as robots are increasingly used in the world of work.
Up to a third of existing jobs could face automation by the early 2030s, but new Artificial Intelligence (AI) technologies could boost production and generate more jobs, PwC said.
Its analysis found that the UK has fewer jobs at potential risk of automation than in other countries including Germany, the United States and Japan.
Jobs in transportation and storage, manufacturing and retail are most likely to be automated, while the lowest risks are in education, health and social work, the report said.