Scotland referendum Yes vote would be a massive No, insists Danske Bank
Independence would see 'volatile economy and disrupt investment'
This week's Scottish Independence vote could create volatility for the Northern Ireland and UK economies and disrupt investment, Danske Bank has warned.
Describing a Yes vote as "by far the largest risk on the horizon", the quarterly sectoral forecast from the bank said that besides losing some 8.3% of the UK population and roughly 10% of current GDP, there would also be currency and political ramifications from a split in the Union.
The report predicts that Northern Ireland economic growth should reach 2.6% in 2014, up from 2.4% in previous forecast and 2.3% in 2015, driven by rising employment levels, a recovery in the housing market, improved confidence, improved credit conditions and the recent rebound in the neighbouring economies of Great Britain and the Republic of Ireland. Danske Bank chief economist Angela McGowan said that recent improvements in the housing market have provided a welcome lift for the construction sector and helped to boost consumer confidence.
"Over the year we saw new jobs being created in a variety of sectors including agriculture, manufacturing, construction and services, indicating that the recovery is now much more wide-spread across Northern Ireland's private sector," she said.
"There is a good story to tell around the private side of our economy as the vast majority of sectors are now expanding again.
"The overall challenge is of course to grow the private sector significantly more – but that takes time.
"Regardless of the political environment, policy makers in Northern Ireland must stay close to the economic script in terms of focusing on skills, investment, enterprise and infrastructure to ensure that Northern Ireland's economy can withstand any political storm."
Figures from the Office for National Statistics yesterday said house prices in Northern Ireland grew 4.5% in the 12 months to July 2014, to an average of £139,000.
Administration and support services and construction are the sectors forecast to experience the fastest rates of growth in 2014, each expanding by 5.1%.
Overall, the report predicts rising employment levels. Last month energy firm SSE Airtricity announced it was to create 143 new jobs in Belfast with the expansion of its customer service centre.
And also last month, top law firm Baker and McKenzie said it was to locate its new global services centre in Belfast.
The average salary for the 256 jobs will be £31,000 a year, contributing around £8m to the local economy.
More than 70 staff in legal services are being sought, with a further 185 being required to staff its administrative services. A recruitment drive will begin soon to hire lawyers, graduates and non-graduates, IT professionals and human resources personnel.
A Yes vote in the Scottish referendum is the biggest risk to economic growth on the horizon. If Scotland leaves the UK, it is likely to supplant the Republic as our biggest export market. Over 2012-13, exports to the Republic were around £1.3bn, while sales to the UK, which are not broken down into regions, were £8.1bn.
Amount of the UK's GDP which would be lost with Scottish independence