Republic's cutbacks 'to impact on Ulster'
Northern Ireland will not be immune from the "gut wrenching" austerity plan being put in place in the Republic of Ireland, according to a leading economist.
Mike Smyth, writing in the latest First Trust Bank Economic Outlook and Business Review also said that the Northern Ireland Executive will have to make "extremely difficult and undoubtedly unpopular choices" on public sector spending in the light of the Comprehensive Spending Review. He added that delivery of a competitive corporate tax regime and attracting greater volumes of high value foreign direct investment are vital.
Mr Smyth claims the removal of £1.4bn from the Northern Ireland capital expenditure programme over the next four years will result in projects being pushed back or cancelled and will present serious knock-on effects, especially for the construction sector.
"The difficult austerity plan that is now being put in place in the Republic of Ireland will also have a major impact north of the border," he said.
"Just as Northern Ireland benefited during the years of the 'Celtic Tiger', it will now feel the full force of the aftermath of what has been dubbed the 'Celtic binge'.
"This will in all likelihood lead to job losses in cross border contract work, while lower labour mobility in both economies will hit jobs just as it was in the late 1980s.
"At the same time the crisis in the Irish economy has also shed some light on the potential benefits of a lower corporation tax regime.
"Clearly a low competitive rate of corporation tax will carry a large price tag for Northern Ireland, but for Ireland this clearly is a price well worth paying."
In Northern Ireland, the forecast does not predict anything but further retrenchment in the service sector.
In the Republic, the forecast says it will be 2011 and beyond before the economy returns to a solid growth path.