Belfast Telegraph

Northern Ireland economy 'facing worse things than Brexit next year'

By John Mulgrew

Brexit could be the least of Northern Ireland's economic hurdles next year amid a volatile eurozone and fears over public spending, a leading economist has said.

Dr Esmond Birnie of Ulster University has said the current crisis around the Renewable Heat Incentive (RHI) - the botched green scheme that could cost the taxpayer £400m - could be a "symptom of a deeper malaise".

Speaking about what the global economy had in store for 2017, he said while "both the Northern Ireland and UK economies reach the end of 2016 in better shape than had been predicted, there may be troubles ahead, and Brexit could be the least of it".

"The world economy is in a very fragile state," he added.

"As the US begins to edge interest rates, which may accelerate under President Trump, how will other economies react given that we all got so used to zero or even negative rates?"

He said 2017 could be the year when one of the eurozone's 19 members exits the currency, and this implies that "our major export markets in the eurozone, which include the Republic of Ireland, could be very volatile next year".

"All the design flaws which were inherent in the euro since its creation 16 years ago have come back to haunt us," he said.

"How best could Northern Ireland's private sector respond to such pervasive uncertainty? Do what it always does and should do - seek out profitable business opportunities anywhere around the world."

Referring to the public sector, and in light of RHI, Dr Birnie said Stormont should move away from a "spending agency which receives a block grant from London and decides how to divide up that block of funding".

He said: "The most worrying aspect of this is that the RHI could be a symptom of a deeper malaise, the widespread belief that if the worst comes to worst, HM Treasury and the London Government will always ride to our rescue with extra money.

"In the case of the RHI, the Treasury refused to be the funder of a last resort, but the Northern Ireland authorities discovered this too late.

"If decisions about spending on new programmes had to be accompanied by decisions about how to fund such programmes through extra taxes or charges, the likelihood is that spending would be managed more wisely."

Looking ahead, he said: "Very early in the new year, the Executive will need to present its draft budget.

"The Treasury will be watching closely to see if Stormont's budgetary position is sufficiently robust and sustainable to permit the devolution of corporation tax powers next April."

Belfast Telegraph

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