At last, Northern Ireland recovery is on the way
The brightest economic outlook in years will prompt an increase in house prices in Northern Ireland by nearly 7% this year and the creation of over 13,000 jobs, an independent think-tank has predicted.
The Northern Ireland Centre for Economic Policy (NICEP) said the recovery would continue into 2015, with house prices climbing a further 8.5% and the creation of 9,600 new jobs.
Gareth Hetherington, associate director at NICEP said the bullish outlook chimed with the current state of the business world.
"The Northern Ireland economy enjoyed a welcome change of direction last year and the prospects for the remainder of 2014 and into 2015 are positive," he said. "The number of people in employment accelerated in the last nine months and this is forecast to continue throughout this year.
"Home owners are also likely to enjoy rising property prices and we can say with confidence that the property market has finally turned the corner."
But despite the optimistic outlook, Mr Hetherington said there was no room for complacency.
He said an increase in consumer spending was at the heart of the recovery in the UP – a less-than-solid crutch compared to the boost to business investment and exports which has been the backbone of the economic revival in countries such as Germany.
As such, the recovery in Northern Ireland will be short-lived without accelerated growth in the business sector and improved trade performance.
Mr Hetherington said policy makers needed to focus on supporting enterprise, reducing business costs and attracting foreign direct investment to maintain upward momentum.
"It may seem churlish to be warning of longer-term risks just as an improved economic forecast is being made for 2014, but with potential economic challenges already visible on the horizon, there is a lot of hard work ahead for government if this recovery is not to run out of steam," he said.
In addition, Northern Ireland needs to address its fiscal deficit – that is, the amount by which government spending exceeds revenues from taxation in any given year.
NICEP estimates the Northern Ireland fiscal deficit for 2012/13 at approximately £9.4bn, over £5,000 for every person in Northern Ireland.
"Although we are not required to re-pay this annual deficit, it is a vulnerable position for Northern Ireland to be so reliant on other parts of the UP to fund our standard of living to this extent.
"This information puts in stark context the need for an honest debate about the structure of our economy, how we increase our tax base by growing the private sector and how we deliver and pay for public services."
Northern Ireland – Economic Forecasts:
A House price increase B Economic growth
2014 A 6.7% B 2.8%
2015 A 8.5% B 2.9%
2016 A 8.4% B 2.6%
2017 A 8.0% B 1.8%
2018 A 7.0% B 1.5%