North's economic growth will match UK - but 4,500 jobs could go says EY
ECONOMIC growth in Northern Ireland will match the UK this year at 1.3 per cent before falling to 0.9 per cent and 1.2 per cent over the next two year.
The forecasts - contained in the latest Economic Eye paper from business advice firm EY - are predicated on a Brexit agreement being reached which involves a two-year transition period and a free trade agreement to follow.
The data predicts that the north's labour market, which has expanded in each of the last six years, will contract slightly in 2019 and 2020, with 4,560 jobs being lost.
And on the issue of Brexit, it says businesses' ‘wait and see' attitude towards their preparations and the continued possibility of a ‘no-deal' has led many to move beyond risk assessment and into a contingency planning phase.
Professor Neil Gibson, chief economist for EY Ireland, said the labour market contraction was striking given how strong workforce job growth has been over the past 12 months.
“In many ways, Northern Ireland's labour market performance has been a pleasant surprise over the last 24 months, but sadly this is not translating to strong levels of headline growth, or indeed any marked pick up in wage inflation.
“As such, we anticipate that the labour market will peak in 2018, as the region's long standing productivity problems, coupled with growing uncertainty around the UK economy, begin to take their toll.
“A favourable Brexit outcome and restoration of the local Executive are two possible factors that could help deliver a more favourable outcome than currently predicted.”
EY Economic Eye also finds that the divergence in outlook between the Republic and Northern Ireland continues to widen as Brexit approaches.
Mr Gibson adds: “Fundamentally, the all-island economy is enjoying a period of strong labour market growth and for most citizens, it is labour market performance that is easier to observe than more abstract concepts such as GDP.
“With housing costs lower in Northern Ireland, and many personal tax rates or costs also lower, there is less of a divergence in living standards than might be expected. The region also remains an attractive location for investors on the basis of its skills/cost proposition and this has contributed to recent out-performance of most published forecasts.”