Subdued growth expected for Northern Ireland economy amid political uncertainty

The north's economy is expected to record muted growth over the next three years, according to a new Ulster University Economic Policy Centre report
Gareth McKeown

THE north's economy is expected to report muted growth over the next three years, with political uncertainty a key factor, a new report shows.

The Ulster University Economic Policy Centre's summer outlook states that Northern Ireland recorded economic growth of 1.2 per cent last year, with the figure to rise marginally to 1.3 per cent in 2019. By comparison the UK as a whole saw a rise of 1.4 per cent last year and economic growth is expected to hit 1.7 per cent in 2019.

The report forecasts growth of 1.2 per cent next year and in 2021 for Northern Ireland, while the figure falls to 0.9 per cent in 2022. This follows a similar pattern to the UK rate, which falls to 1.2 per cent in 2022, but economic growth in the north remains well below the UK in the short-term, according to the figures.

There is positivity within the report though, with the north's low unemployment levels set to continue to fall against the backdrop of a largely static UK rate. Unemployment stood at 3.7 per cent at the end of 2018 and that will slide to 3.6 per cent this year and then to 3.5 per cent, 3.3 per cent and 3.1 per cent in the succeeding three years.

House prices, which grew by 4.6 per cent last year, are expected to continue on an upward trajectory, with growth forecast to reach 5.1 per cent in 2019. The rate will then fall significantly to 3.4 per cent in 2020 and drop to 3.2 per cent and 2.2 per cent in 2021 and 2022 respectively. House prices continue to increase at a sharper rate in Northern Ireland than in the UK over the next three years, the figures show.

Employment growth is expected to sink to 0.2 per cent this year and in 2020 from a high of 0.9 per cent last year. A pick-up though is expected in 2021 to 0.6 per cent, before a marginal reduction in 2022 (0.5 per cent)

Gareth Hetherington, director of the Ulster University Economic Policy Centre said the lack of a Stormont government and Brexit uncertainty has acted as a "brake" on economic growth.

“It seems, economically, that we are in a permanent state of anticipation," he said.

"Both locally and internationally, we have spent the last few years waiting for something to happen. We have been waiting for the return of Stormont, the Brexit deal to be agreed, productivity growth to finally pick up, an outcome to the US-Chinese trade dispute, the list goes on. These factors all create uncertainty, which is the enemy of business investment, and act as a brake on economic growth."

"This is a shame because there are economic good news stories to be shared. The local economy has now created over 78k jobs since 2012, across many sectors, with momentum in growth being maintained," he added.

The analysis further forecasts that inflation will average 2.2 per cent this year and 2020, before falling to a rate of 1.4 per cent in the following two years. Interest rates are set to remain at 1 per cent at the end of 2019 and the three years thereafter.