Belfast Telegraph

Brexit could slash jobs growth and incomes in Northern Ireland

By Claire McNeilly

Northern Ireland is bracing itself for a slowdown in job creation and a fall in real wages as Brexit and other global factors take their toll.

Consumers will also feel the squeeze as the economy falters, the Ulster University Economic Policy Centre (UUEPC) said.

But the good news is we will stop short of a recession.

The warning of challenging times ahead follows a buoyant year marked by local jobs growth of 3.3% in the 12 months to September - well ahead of the UK average of just 1.3% over the same period.

UUEPC associate director Gareth Hetherington said that despite the recent employment growth, future economic uncertainty should not be played down.

"We're still forecasting wage growth, but inflation is also going to rise," he cautioned.

"Annual earnings will increase, but it won't be as much as this year and last year and people will start to feel the squeeze. We're going to see lower levels of growth on the back of the uncertainty caused by Brexit, higher levels of inflation and other global economic factors, but it's a slowdown in growth, it's not a recession."

Mr Hetherington predicted the economy would start improving towards the end of the decade as greater certainty emerged, prompting growth rates to pick back up.

"We also expect there to be additional tourism and retail spending, driven by the depreciation in sterling, and that should partially offset the slowdown in business investment," he added.

"However, the difference between our most optimistic and pessimistic scenarios is stark. The jobs growth forecast ranges from a loss of 4,500 over the next decade to an increase of almost 90,000, such is the level of uncertainty."

Proffered as the most likely scenario, the UUEPC Winter Outlook suggests that 32,500 jobs could be created over the next decade, with the biggest hike expected in administration and support services.

Other sectors on the rise are the construction industry and accountancy, while there is expected to be no growth at all in retail, and a decline in banking and insurance.

Administration and support services, which have grown very strongly over the past few years and continue to offer the biggest growth, include agency workers, whom Mr Hetherington said could become more important in the near future.

"Since the financial crisis, what we've seen is that firms such as Bombardier have been much more willing to use agency workers rather than bring on permanent staff," he added.

"Agency workers brought in on shorter-term contracts are an important part of the new economy and there are large numbers of them across all sectors of the economy."

He also warned that the Executive could not hide behind Brexit as an excuse for failing to address our long-standing economic challenges.

"Non-student inactivity rates, low productivity and the high numbers of school leavers with low or no qualifications have persisted for many years," Mr Hetherington said.

"As a result, the key outcomes in the Programme for Government remain a priority inside or outside the EU."

Economist John Simpson stressed that the immediate impact of the EU referendum had not been as significant as many forecasters anticipated, but he added that living standards in Northern Ireland would drop as Brexit was implemented.

"Real wages in Northern Ireland will fall by £300 in 2018 (based on an average local wage of £20,000)," he said.

"The figures show that this year wages grew by 3% in Northern Ireland, while inflation was just under 1%.

"But although salaries are predicted to rise by 5% in 2018, inflation is expected to be 3.5%, meaning that consumers will be less well off.

"It gets worse in 2020 because wage growth is due to be less than 3% and inflation is 4%, which indicates that living standards will fall as Brexit is implemented."

Belfast Telegraph