Business mood now decoupled from our 'sour' politics: analyst
Economist claims confidence high and that growth is now expanding
Northern Ireland business is "decoupling" from Stormont and getting on with improving the economy, an economist has said.
Alan Bridle, UK economist and market analyst for Bank of Ireland, was speaking at the annual CBI economic briefing.
The event also heard a speech from Martin Weale, in which the Bank of England's monetary policy committee man said he did not see an "immediate" case for an increase in interest rates.
Mr Bridle said Northern Ireland was in the midst of "incomplete" recovery which could only be understood in reference to the "unsustainable" growth of the years up to and including 2007.
Previous annual growth of around 3% had been driven by private sector leverage, credit which had created a property bubble – and the "public spending largesse of the second Labour government".
But he added: "The economy is expanding again and that's a good thing."
He said production was still the star performer in the economy, and accounted for 13% of output.
Business failure rates and insolvencies were down but were still up on the pre-recession volumes, with even recovery bringing risks for business. He added: "Confidence is higher – and confidence is infectious. But it can be fickle and it can turn very quickly."
The attitude of business towards politics in Northern Ireland had shifted, he said.
"Politics have turned very sour but it seems at last that the economic mood has become decoupled from the political mood.
"Business may have lost interest or is indifferent to what's happening on the hill [Stormont] – and is that a good thing or a bad thing?"
In his speech opening yesterday's briefing, Mr Weale considered the factors contributing to inflationary pressure.
And he revealed: "I don't think there's an immediate case for the increase in interest rates."
Even if rates rose by 0.25% he said there would be enough stimulus from monetary policy. He said that increases, when they did come, would be "gradual and measured".
But he added: "The policy of raising bank rate gradually does imply that the first rise needs to come sooner than would otherwise be the case."
His comments echo remarks by bank governor Mark Carney in his Mansion House speech last week.
Minutes from the MPC earlier this month disclosed that at the time they found it "somewhat surprising" that markets attached only a relatively low probability to a hike by the end of the year.
Katja Hall, CBI deputy director-general, said: "Both Martin Weale's speech and the minutes of the MPC's June meeting reiterate that when interest rates do rise, they will do so gradually so that the economic recovery is still supported.
"Mr Weale and the MPC also highlight that the more gradual any increases in rates will be, the earlier policy may need to be tightened.
"Mr Weale points to uncertainty over the amount of spare capacity in the labour market, which is a key consideration for future monetary policy."