Belfast Telegraph

PwC says outlook remains gloomy for Northern Ireland's economic growth

By Margaret Canning

prospects for the Northern Ireland economy are becoming gloomier despite falling unemployment, according to business advisers PwC.

The firm's economic outlook said growth would slow over the next 12 months as it lacked proper support.

In fact, the 2.2% growth enjoyed in 2014 was driven by consumer spending, PwC said, instead of more desirable factors such as exports and investment.

But consumer spending was finite as households could not keep spending their savings.

In fact, Northern Ireland's rate of growth was likely to slip down to 1.9% in 2015, which would be the lowest of the 12 UK regions. UK growth overall would be 2.5% in 2015, compared to around 3% in 2014.

PwC chief economist Dr Esmond Birnie said strong employment growth and low mortgage rates had helped stimulate consumer spending.

But Mr Birnie added that those spendthrift days were coming to an end.

"We expect the proportion of household spending on essentials like housing costs and utilities to rise steadily and account for more than a quarter of total consumer spending by 2020.

"In addition, as lending increases and interest rates go up the proportion of financial services spending, excluding mortgage interest is also expected to increase to around 13% of total household budgets by 2020."

And while there had been high rates of job creation in the last 18 months, there had been no corresponding rise in wages in the province.

"This has not translated into wealth creation which is essential to close the gap with the rest of the UK."

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