Bank slashes growth forecasts over 'uncertainty' at Executive
Northern Ireland's economy will do worse than expected this year as a result of the "political uncertainty" at Stormont, a report has warned today.
Danske Bank's quarterly sectoral forecast said the economy would still expand - but at a lower rate than predicted.
Today's forecast rounds growth down to 2% from 2.2% - but does make a more upbeat prediction of 2.3% for 2016.
Danske said its slower forecast for this year was triggered by the strong pound - combined with uncertainty surrounding the Executive's failure to agree over welfare reform and fears around the possible outcome of a referendum on EU membership.
The report said the economy will be hit by the cut in public expenditure and a £500m gap in the Department of Finance and Personnel budget. It also added the EU referendum could delay foreign direct investment.
However, the economy should benefit from the slight increase in employment numbers and the continuing low inflation, the bank added.
Danske Bank's chief economist Angela McGowan said: "It is ironic that just as the economy had got back on its feet after the worst recession in a generation, that political uncertainty could dent recent progress.
"Northern Ireland has seen a dramatic improvement in the labour market, Foreign direct investment levels have been impressive, the housing market has recovered and consumers have regained confidence.
"However, this economy is now facing some enormous challenges around the delivery of public services with a significantly reduced budget and cuts to investment in education and skills."
The sectors set to see highest growth this year are IT at 5.5% growth, and wholesale and retail at 4.6%.
Administration and support services, professional and scientific services and hospitality would see growth of 4% or over - while arts entertainment and recreation would have growth of around 3%.
But the public sector would perform worst, with job numbers expected to shrink by 1,500.
Ms McGowan said: "The private sector continues to perform well on a number of fronts."
She added: "However, headwinds in the form of public expenditure cuts, an EU referendum and the strong pound will undoubtedly dominate the economic landscape in the months ahead and have the potential to act as a drag on growth."