Hi °C | Lo °C The Northern Ireland economy will barely grow this year, a new survey has warned.
The Ernst -amp; Young Economic Eye Summer Forecast has downgraded the growth in Northern Ireland's Gross Value Added (GVA) from 1.1% to 0.1% in 2012 and 1.0% in 2013 and 2.1% in 2014 despite the region avoiding the scale of austerity experienced in the Republic.
GVA is said to be a more accurate measure of output than gross domestic product.
Overall, Northern Ireland's growth will be insufficient to offset the contraction predicted in the Republic in 2012, meaning the all-island domestic economy will contract by 0.7%.
And our relatively small export base hampers the region, according to the report, with growth predicted to lag someway behind both the UK and the Republic in the medium and long-term.
While the report acknowledges that current policy is focused on boosting exports, efforts will be hampered if the current bid to have the region's corporation tax rate lowered is defeated.
Future debate on how Northern Ireland is funded was also highlighted.
The report said that while the region remains "extremely fortunate" that it does not have to borrow to fund its annual deficit of greater than 30% of the size of its economy, it points out that if Northern Ireland was a national economy, this would be the largest fiscal deficit by a considerable margin in the eurozone.
The cost of subsidising the province is roughly £9bn a year, equivalent to the full cost of the London Olympics.
Economic Eye also suggested that the island of Ireland will need to increase employment by over 400,000 to reach a desirable 70% employment rate by 2022. This is almost double the current forecast for growth.
Neil Gibson, economic adviser to Ernst -amp; Young, said ongoing problems in the eurozone together with weak domestic demand, rising unemployment and a decline in real incomes along with austerity measures have conspired to downgrade short-term growth prospects.
"Job creation has moved up the policy agenda in both the Republic and Northern Ireland but it is difficult for government to create jobs against an austerity backdrop," he said.
"They must focus on making it easier and more affordable for businesses to increase their workforce and build and maintain an environment within which businesses can thrive."
