Unemployment in Northern Ireland may increase to a peak of 13% later this year. But an otherwise optimistic assessment by the University of Ulster Economic Policy Centre (UUEPC) suggests that the Northern Ireland economy could recover the lost output and incomes caused by the current recession by late 2023 or in 2024.
The economists from UU have outlined what they assess are possible outcomes of present actions by business managers and by government policy makers.
Looking ahead to gauge how the economy may change is a hazardous task. There have been no precedents for the type of recession that has been, in part, a consequence of the Covid-19 pandemic. The UUEPC has usefully compared the experience in NI from previous downturns in the economy including the financial crash earlier this century.
The UUEPC describes a 'pathway to economic recovery' where, interestingly, it quotes partial evidence to suggest that before the end of 2020 the worst of the fall in output, incomes and jobs may have ended and some recovery will have begun to be evidenced.
Even that conclusion should be qualified since a major second spike in Covid-19 would make matters worse.
A scenario that NI might recover the lost output of the Covid-19 recession by either late 2023 or 2024 is better than many have expected. There is no comparable economic and political crisis affecting NI since the experience of the 1930s.
If this scenario is, as it may be, too optimistic, there is a danger that the need for more interventionist actions will be obscured. An over-complacent reaction may be the basis for too passive a response, for example, from the UUEPC and the NI Executive.
The Covid-19 induced recession is wide-ranging and combines an intense market shock with major behavioural changes affecting economic and social outcomes. Redundancies are taking place on a large scale.
International trade linkages are being disrupted. Savings and spending by households are under strain both because household incomes are often lower than just a year ago and because households are more likely to be cautious about spending.
Add Brexit to Covid-19 and the degree of uncertainty and concern about instability increases further. The protocol on Ireland and NI, now agreed in an international treaty, still awaits a clear statement of the way in which it is to operate.
The expected advantage to NI of the decision to allow it to remain within the EU market arrangements for goods has not been convincingly demonstrated.
Quite the reverse, the perception of a customs advantage in the Irish Sea has been portrayed as a deterrent rather than a benefit (which it should be).
Since the UUEPC takes what may be a too optimistic view of the impact of the Covid-19 induced recession, a consequence is that the UUEPC does not feel that major policy additions should now be considered by the Executive.
It outlines a series of priorities for the medium and longer term including keeping young people in education for longer; reskilling opportunities during and after furlough; accelerated government investment plans; returning public sector staff to their town and city centre offices; adapting to changing tourism patterns; adapting the near-shoring search for foreign direct investment, and that normal business of government must continue.
These suggestions are a complex mixture of ideas. Since Stormont has the devolved authority over many areas of economic policy, the Executive might be better served if the UUEPC had been more specific in choosing potential policy changes. In the last phrase of the pathways document, the UUEPC asks the Executive to tackle the broader competitiveness of the NI economy.
Rather than being the final thought, perhaps that might have been a theme setting opening statement.