Belfast Telegraph

Northern Ireland could tip into recession after Brexit vote, warns Simpson

By Lisa Smyth

Northern Ireland could be on the way to recession following the Brexit vote, a leading economist has warned.

New figures have revealed a contraction in the services sector across the UK in July.

Economist John Simpson said this reflected predictions made by experts ahead of the EU referendum in June.

The Markit/CIPS services purchasing managers' index (PMI), showed a reading of 47.4 in July, down from 52.3 in June - the biggest monthly fall in activity on record.

It marked the first contraction in the services sector since December 2012 and the steepest rate of decline for more than seven years, while the month-on-month drop was the worst since records began in July 1996.

Mr Simpson said: "We said that if we had to leave the EU then the economy would suffer, although there were disagreements over how much it would suffer and how quickly.

"What this survey shows is that the economists were right to say that the decision to leave the EU would have a negative impact.

"The fact they are going in the direction we all expected suggests it could be the beginning of a serious worry, particularly in Northern Ireland, where the economy has been recovering more slowly than the rest of the UK.

"I do think it is a moment to be slightly worried."

Mr Simpson said he believed employment levels may drop and that the housing market may also be affected.

"If I were selling cars over the next six months I would be worried," he said. "We may be going into a period of recession that may well last for a year or so."

It comes as the Chancellor is being urged to deliver a feel-good autumn statement as businesses lose confidence in the prospects for the UK economy.

The Institute of Directors (IoD) has called for Philip Hammond to take "bold steps".

Belfast Telegraph