US budget crisis hits Northern Ireland economy as wrangle slows global recovery
Northern Ireland would be damaged by a slowdown in the global economic recovery if United States lawmakers fail to resolve the country's budget crisis, Danske Bank's chief economist Angela McGowan told a breakfast business briefing in Londonderry yesterday hosted by the city's Chamber of Commerce.
"Overall it is developed countries that are taking over in the driving seat," Ms McGowan explained.
This followed a period in which emerging markets had been leading economic growth.
"We have [recently] seen a big move out of emerging markets, out of their stocks, out of their currencies," she added.
With the apparent resolution of the political crisis in Italy, there are some positive signs in the eurozone, believes Ms McGowan, but, she warned, "there is a mixed picture in Europe", with the "peripheral nations still struggling".
"The main risk at the moment are the emerging markets and the turmoil in the United States."
Northern Ireland, though, is displaying a slower economic recovery than the rest of the UK and is likely to be more badly affected by welfare reform, as has been shown by the new report from the Northern Ireland Council for Voluntary Action, she said.
"Welfare reform will present a problem for us in Northern Ireland as household incomes will fall. We are more dependent on benefits in Northern Ireland than the rest of the UK."
Despite this, the general picture is one of slow economic recovery, assisted by a likely slowdown in governments' austerity programmes.
Danske Bank expects to see a 6% growth next year in the US, providing the current crisis can be resolved.
Corporate confidence in Northern Ireland is improving as is consumer confidence.
Ms McGowan added that she was impressed by the way Derry had used its status as UK City of Culture to plan for long term benefits and a positive economic legacy, rather than focusing on short term incomes.
She said that the evidence from elsewhere is that a city benefits mostly over the medium and longer term from this type of exposure.