Northern Ireland's private sector must step up to aid recovery says economist
Northern Ireland has recouped around two-thirds of jobs lost following the recession but business output has failed to keep up with the pace, one economist has warned.
Around a sixth of businesses in Northern Ireland are "surviving, and surviving no more", Bank of Ireland UK economist Alan Bridle said during a CBI briefing and forecast in Belfast yesterday.
"The next few years are really about the private sector stepping up," he said.
"The recovery to date is rather modest in output terms, but a lot stronger in job terms.
"Going forward, we know the public sector is going in to a period of contraction. The question is, how fast does the private sector have to run to keep the overall economy going?"
He said there were also concerns that business confidence would fall yet further, as a stalemate over welfare reform continued to muddy the workplace waters.
"If the public sector is contracting 1% a year, and the private sector is growing by about 2%, that means overall growth is about 1.25% a year."
And speaking about the impact an EU referendum could have on the economy, Mr Bridle said "it won't be a surprise if some UK investment is put on hold" over the next 12 to 18 months.
The latest figures suggest that 70% of Northern Ireland businesses support remaining part of a "reformed" EU.
But he said with "so many unknowns it's hard to make a judgment" on the issue.
"Until there is clarity around a number of issues, it's very hard to come down on one side," he said.
On the issue of a Brexit, he said questions still surrounded what will happen to businesses if the UK leaves the EU.
That includes the impact on exports, the supply chain, location of headquarters as well as labour market issues.
And he said Northern Ireland must target export markets to grow the private sector.
While exchange rates have made some business more difficult - in particular trade with the Republic and Europe - firms which focus on export markets "still remain stronger" than those which don't, Mr Bridle said.
And further on the thorny issue of currency, while the weak euro is likely flatten out there is "no rebound expected soon".
Meanwhile, negative equity in property has also been a key fallout for consumers over the last seven years, with property prices falling by up to 60% from their 2007 peak. Mr Bridle said while "our negative equity challenge is easing with the recovery in house prices", Northern Ireland remains the worst affected region in the UK.
Concerns among business owners in Northern Ireland have also changed in the last few months, with exchanges rates and competition the two main issues raised. Addressing wider economic issues, CBI economics director Rain Newton Smith said the UK was "one of the bright lights among international economies. I think that will continue over the next couple of years, but it won't be without its challenges," she said.
And she said the UK was forecast to grow by around 2.5% this year and next.