Posted on Thursday 19 June 2014 by Ulster Business
Consumer spending has helped boost prospects for the year ahead
Growing government and consumer spending mean the Northern Ireland economy is set for a year of strong growth in 2014, according to the latest report from business advisers EY.
Its Economic Eye Summer 2014 report expects economic growth of 2.4% for the year as a whole, a figure which compares to just 1.4% in 2013 and one which is helped significantly by strength for the wider UK economy, as well as a healthier economy in the Republic.
For 2015, the growth rate is expected to ease, according to Michael Hall, Managing Partner at EY Northern Ireland.
"Economic indicators for 2014 continue to build on the positive momentum of last year, however, the outlook is slightly less positive for 2015," he said. "The rate of recovery in Northern Ireland remains dependent on the UK economy and consumers are still hard-pressed, notwithstanding positive momentum in the jobs market.
"That said, overall business sentiment is on the rise, with recent measures announced in the Chancellor's budget, such as enhanced tax relief, undoubtedly having a positive impact on NI businesses."
The more bullish picture will also maintain the upward momentum in the labour market for now but EY warns employment growth could slow considerably if the recovery runs out of steam.
It predicts the creation of 6,000 net jobs on an annual basis between 2013 and 2020, a figure which falls short of EY's own targets set to bring unemployment back down below pre-recession levels.
While the immediate picture looks positive, EY said it pays to be mindful of the risks the economy could face over the next few years.
"Given there is an election next May, there is a fear that there may be further austerity measures in the UK," Michael Hall said. "We need to be mindful of the adverse impact this could have on the NI economy and it crucial that NI's new Programme for Government pays proactive heed to the economic risks and realities identified by Economic Eye."
"The Northern Ireland economy still needs game-changing policies such as powers to reduce the Corporation Tax rate. Without this, it is difficult to see how NI's economy will be able to tackle its structural challenges and not fall further behind the UK and the ROI. All eyes will not be on the Scottish Independence after which we understand a decision will be made on Northern Ireland's Corporation Tax, which will play a vital role in continuing to attract FDI".