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Stormont budget squabbles are harming confidence: PwC report

By Staff Reporter

Published 02/04/2015

Dr Esmond Birnie, PwC's chief economist in Northern Ireland
Dr Esmond Birnie, PwC's chief economist in Northern Ireland

Failure to fully agree the Stormont House Agreement is harming investment confidence, a PwC report has said.

The firm's latest economic outlook also downgraded its prospects for growth in the economy here to 1.7% expansion in gross value added (GVA).

PwC said Northern Ireland was enjoying modest recovery and jobs growth mainly thanks to domestic consumption.

The firm's outlook said that job creation was almost reaching pre-recession levels with 24,000 new jobs in the last 24 months.

There had also been good news on unemployment, with a fall of almost one-fifth in dole queues.

But PwC said the region was still lagging behind the rest of the UK and was not showing recovery in wages, productivity or living standards.

PwC has now predicted growth of 1.7% for this year - down from some other forecasts. Danske Bank has forecast growth of 2.2%.

The report also forecasts overall UK growth of 2.5% in 2015, down from 2.8% in 2014, with any gains from cheaper oil offset by the impact of difficulties in the eurozone.

PwC expects the Irish economy to continue its strong recovery, posting growth of 3.3% in 2015. The firm also said that the failure to agree on the full implementation of the Stormont House Agreement was harming investment and business confidence.

Dr Esmond Birnie, PwC's chief economist in Northern Ireland, said: "Measured by new job creation and falling unemployment alone, Northern Ireland is demonstrating strong recovery, however a number of other factors are of concern.

"While the region's unemployment fell by 19.8% in 2014, that fall was only about half that of the UK average, where the jobless total declined by 32.5%.

"Northern Ireland's economic inactivity rate is 27.8% and remains the highest of the 12 UK regions and in the past year the growth in the number of economically inactive was actually greater than the total decline in unemployment."

He said that the fall in inflation to 0% did equate to a real increase in wages but should be contrasted with the increase in property prices, which grew by 7.3% in the year to January 2015.

And while the recent budget had brought £11m in new money under the Barnett Formula, that was around fifth of the £54m received in March 2014.

And with more austerity to come, there were difficult times ahead.

"The challenge over welfare reform means £2bn of Westminster funding and the future of corporation tax powers depend on the full implementation of the Stormont House Agreement," Mr Birnie said.


PricewaterhouseCoopers has delivered a not entirely upbeat assessment for economic growth in Northern Ireland during the current year. Despite employment growth and a fall in unemployment levels, we are not seeing a lift in productivity or wages, the business advisory company has said. Austerity will continue in the near future and the Executive would face cuts in the block grant. The firm also said the failure to fully agree the Stormont House Agreement was harming investor confidence. Overall, unemployment dropped by nearly 20% last year but the fall was higher in the rest of the UK.

Belfast Telegraph

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