No-deal Brexit could cost more than 10,000 jobs says report
A NO-DEAL Brexit could plunge the Northern Ireland economy into recession and cost more than 11,000 jobs, a report has warned.
EY’s latest Economic Eye forecast predicts that the north will face a “very challenging” 2019, which will only be exacerbated if the UK and the EU fail to reach agreement before March 29.
If no-deal does come to pass, EY warns it could see the local economy enter recessionary territory, reporting a contraction of 0.2 per cent in 2019 and 0.5 per cent in 2020.
This could lead to the loss of 11,400 jobs in the same period. A projected fall in sterling would also adversely impact consumers through increased imported inflation.
In another Brexit warning stockbroking firm, Goodbody said yesterday that the Republic could fall into a recession within 18 months if no agreement can be reached.
The latest EY analysis projects the Northern Ireland economy will have grown by a modest 1.5 per cent in 2018 – just above the overall UK rate (1.4 per cent), but well below the expected rate in the Republic of Ireland (8.3 per cent). The future outlook is even less positive, with minimal growth of 0.9 per cent and 1.2 per cent predicted for 2019 and 2020 respectively.
Both forecasts again pale in comparison to the uplift in the Republic, expected to come in at 3.9 per cent this year and 3.2 per cent in 2020.
These figures are predicated on a transition agreement being struck by the UK and EU before the official withdrawal date on March 29.
Professor Neil Gibson, chief economist for EY Ireland, said a recession cannot be ruled out in a no-deal scenario as the trade impacts and additional costs hit the already subdued growth.
“Modelling a no-deal outcome is challenging given the complexity of how the economy will react. Currencies will adjust, and spending by governments, consumers and businesses will be impacted in ways that recent history tells us are hard to predict.
“Given the modest growth projected for the Northern Ireland economy in the central case, the possibility of a no-deal outcome pushing the economy into recession cannot be discounted,” he said.
“However, businesses have shown a remarkable resilience to cope with uncertain conditions over the last two years, and this gives reason to believe that they will again find ways to turn uncertainty and risk into opportunity, and outperform what economic models predict.”
EY Northern Ireland managing partner Michael Hall believes businesses on the island face a challenging environment, with Brexit a key concern.
“Brexit dominates the headlines but for many firms the pressure to meet orders and staff their businesses feels even more urgent. Talent remains the number one challenge for firms across the island, but interestingly, improving efficiency is the top opportunity reported,” he said.
“This suggests that firms are increasingly looking at creative ways to tackle costs and this may slow the overall level of job growth across the island.”
The EY figures further predict that should an agreement be reached the north’s labour market will contract by just under 500 jobs in 2019, after six years of expansion.
The wholesale and retail sector as well as agriculture are set to be the worst hit over the next five years losing 4,570 and 2,130 jobs respectively. By contrast the ICT (6,780), construction (3,260) and professional service sectors (3,170) are set to benefit from the greatest jobs boon.