Posted on Tuesday 1 October 2019 by John Mulgrew
Northern Ireland firms must prepare for a ‘no deal’ Brexit – a bank chief economist has warned – as it downgraded its forecast for the economy to 0.9%.
Danske Bank’s Conor Lambe said there were still a number of possibilities for what might happen over the next 30 days, with the UK due to leave the EU on October 31.
Possibilities included a no-deal exit, a withdrawal agreement being reached, an extension of Article 50 period or a general election.
But predictions were "incredibly difficult", he said. "Businesses should behave prudently and use this time to ensure they are as prepared as they can be for a worst-case scenario, no-deal Brexit, in case it occurs at the end of this month," he said.
The 0.9% is down from the bank’s previous forecasts, delivered in June, that growth would hit 1% in 2019 and 1.3% in 2020.
In its latest Northern Ireland Quarterly Sectoral Forecasts report, Danske Bank said that the Northern Ireland economy likely expanded in the second quarter of the year, but the rate of growth over the first half of the year remained modest.
“We have revised our forecast for economic growth in Northern Ireland downwards for both 2019 and 2020,” he said. “This largely reflects the modest data for the first half of the year, increased Brexit-related uncertainty and the weaker global economic environment.
“Assuming that a no-deal Brexit is avoided, we expect the Northern Ireland economy to grow by 0.9% in 2019 and 1.0% in 2020, below the 1.2% we expect UK GDP to grow by in both years.
“A combination of strong wage growth and more stable inflation is likely to lead to solid growth in consumer spending, but the lack of clarity around the UK’s future relationship with the EU is expected to continue holding back business investment.”
It says the information and communication, and professional, scientific & technical services sectors are expected to be the fastest growing parts of the economy over the next two years.
Meanwhile, output in the construction sector is forecast to rise by 1.0% in 2019 and 0.9% in 2020, while expected output growth in the wholesale and retail trade sector has been revised down to 0.9% in 2019 and 0.9% in 2020.
Public administration and defence is continuing to have the weakest outlook of all the sectors of the Northern Ireland economy, with output expected to contract by 0.7% in 2019, and by a further 0.2% in 2020.
“Over the coming weeks, a number of potential Brexit options are possible, including a no-deal exit, a withdrawal agreement being reached, an extension of the Article 50 period or a general election,” Mr Lambe said.
“Predicting what will happen next in the Brexit process is incredibly difficult, but businesses should behave prudently and use this time to ensure they are as prepared as they can be for a worst-case scenario, no-deal Brexit, in case it occurs at the end of this month.”