PwC: crisis looms as trade levels in decline
Northern Ireland is facing an economic crisis as new figures show that private sector business activity has declined for 31 consecutive months.
The latest Northern Ireland Economic Outlook from PricewaterhouseCoopers (PwC) also reveals that confidence in Northern Ireland is now the lowest of the 12 UK regions.
And the business advisors have warned that further public spending constraints are likely to make matters worse. Esmond Birnie, PwC's chief economist in Northern Ireland, said: "It is not an exaggeration to suggest that the region is facing an economic crisis.
"Business confidence is at an all-time low, consumer spending is constrained and the 33,000 jobs lost over the past 24 months are unlikely to be replaced in the foreseeable future."
The report also warned that not only is the province's recovery lagging behind the rest of the UK but the gap is widening.
Mr Birnie said that decades of public spending growth have combined with lacklustre private sector growth to leave the region vulnerable.
PwC has downgraded its previous growth forecasts for 2010 and 2011, suggesting that economic growth is now likely to hit 0.8% in 2010 and around 1.8% in 2011, well behind predicted UK-wide growth of 1.6% and 2.2%. It comes on the back of several grim reports on the Northern Ireland economy including one from Northern Bank this week which also revised down growth forecasts.
Mr Birnie said: "The Republic's economic growth shrank by a frightening 7.5% in 2009 - one of the sharpest economic declines in the developed world.
"However, thanks to a combination of restocking and export recovery, quarter one of 2010 showed positive growth and we expect the Irish economy to grow by around 0.25% this year and 2.75% in 2011."
He added: "In Northern Ireland the private sector probably lacks the critical mass to drive recovery and that is our problem."
PwC also said that unemployment is likely to get worse as the private sector suffers a combination of falling public spending and a lack of investment and confidence. It also warned that house prices could fall again over the next few years.
Looking to the future, Mr Birnie says the outlook remains gloomy. "We can see the potential for UK recovery, but there is no compelling evidence that Northern Ireland can, or will, match the rest of the country in terms of economic growth."