Posted on Monday 24 June 2019 by John Mulgrew
Danske Bank chief economist Conor Lambe
Brexit deadlock will continue to hit Northern Ireland’s private sector and a further extension of the withdrawal from the EU is now the most likely outcome, it has been claimed.
The latest Northern Ireland Quarterly Sectoral Forecasts report from Danske Bank says the economy will grow by 1% this year – rising to 1.3% in 2020, remaining unchanged from previous forecasts
But while jobs growth is predicted at 1.3% this year, the report expects this to fall to just 0.5% in 2020.
Looking at the economy by sectors, services output fell over the quarter, and while production activity increased, the bank says this “was likely related to stockpiling in anticipation of the original Brexit deadline”.
The report says information and communication, administration and support, along with professional services, are expected to be the fastest industries growing over the next two years.
"Once again, Brexit and political uncertainty remain the two biggest risks to economic growth in Northern Ireland,” Conor Lambe, Danske Bank chief economist said. “If the UK Government was to pursue a no-deal Brexit it would likely face hefty parliamentary opposition but while it is an unlikely outcome, leaving without a deal still remains a possibility.
“Between now and October, time constraints alone make a renegotiation of the current deal very difficult and the EU has made clear that it does not want to renegotiate the draft withdrawal agreement. Given the lack of a clear way forward, we think a further extension of the Article 50 process appears to be, just about, the most likely outcome at this stage.”
“Despite the start of a new talks process in May, the local political parties have been unable to come to an agreement to restore the devolved institutions, with a number of key issues still unresolved. There is also a possibility that these talks could be put on hold over the summer. Until an agreement is reached, the political stalemate will continue to act as a drag on business investment and consumer confidence.”
Across the outlook, Mr Lambe said that “consumer spending is projected to pick up, boosted by rising wages and a moderation of inflationary pressures… but Brexit-related uncertainty is likely to continue to drag on business investment and the slower pace of global economic growth is expected to weigh on exports.”
“However, two positives from the first quarter of the year are that local consumer confidence levels increased and jobs growth remained strong. As a result of the strong employment data, we have revised our forecast for jobs growth up to 1.3% in 2019 but then expect it to slow to 0.5% in 2020.”