Brexit and lack of Stormont government to hinder economic growth in 2018
THE lack of a Stormont Executive, coupled with Brexit-related uncertainty is set to hinder Northern Ireland economic growth in 2018 according to a new report.
The Northern Ireland Quarterly Sectoral Forecasts report, published by Danske Bank, states that economic growth in the north will remain "subdued" this year, with political uncertainty creating a climate that is holding back investment and lowering consumer confidence.
The Danske Bank data estimates that the Northern Ireland economy grew by 1.1 per cent in 2017 and is expected to grow by 1 per cent in 2018. It is predicted that nearly all sectors of the economy are expected to grow in the year ahead with the one exception being public administration and defence.
Danske Bank economist Conor Lambe does not foresee a period of sharp economic growth in 2018.
“Northern Ireland experienced sluggish growth in 2017, with the economy estimated to have grown by just 1.1 per cent. Looking into the year ahead, we expect growth to remain subdued and are forecasting a marginal fall in the growth rate to 1 per cent in 2018," he said.
“We expect inflation to fall gradually over the year ahead, but it is likely to remain above the Bank of England's 2 per cent target and average 2.6 per cent over 2018. We think that household spending power will remain under pressure as increases in the rate of nominal wage growth are unlikely to be enough to push real wage growth well into positive territory. With Brexit-related uncertainty also likely to persist, we continue to expect some firms to postpone capital spending until the UK's future trading relationship with the EU becomes clearer.”
Mr Lambe said that a number of risks and uncertainties could affect the forecasts, including continued political uncertainty in Northern Ireland and Brexit.
"The current lack of devolved government means that Northern Ireland is under-represented when it comes to engaging with the UK Government on Brexit and, without the devolved institutions in operation, local policymakers are somewhat restricted in their ability to help shape the future arrangements that will exist at the border with the Republic of Ireland."
"On Brexit, the months and years ahead will bring a new set of challenges, including securing a future trade deal, managing the UK's borders, devising a new approach to migration and replacing the plethora of other economic and non-economic arrangements that currently exist between the UK and the EU. However, focusing on the shorter-term, we are hopeful that a multi-year transition period will be agreed in the first half of 2018," he added
According to the report, the information & communication sector is expected to be the fastest growing in the north in 2018 (3 per cent), followed by the administration & support sector (2.6 per cent) and the professional, scientific & technical services sector (2.6 per cent).
Looking at the labour market the number of employee jobs is estimated to have grown by 1.4 per cent over the past year, but a slowdown is forecast from the end of 2017 into 2018, with growth averaging just 0.3 per cent throughout 2018.