| 17.3°C Belfast

Coronavirus: Northern Ireland economy facing £5.4bn hit and a jobless rate of 12%, says report

Close

Dr Eoin Magennis of Ulster University's Economic Policy Centre

Dr Eoin Magennis of Ulster University's Economic Policy Centre

Dr Eoin Magennis of Ulster University's Economic Policy Centre

Unemployment is expected to peak at 12% this year in Northern Ireland, according to a new report by Ulster University.

Compiled by the university's Economic Policy Centre, it warns that some council areas will be hit particularly badly by the fallout from the Covid-19 shutdown.

Mid Ulster; Newry, Mourne and Down; the Causeway Coast and Glens, and Mid and East Antrim will be worst hit, the authors of the report predict.

They also forecast that the economy will contract by 12.7% in 2020, up from a previous estimate of 9.7% - the equivalent of a £5.4bn fall in economic output in one year.

Unemployment will peak in the autumn, according to the centre.

A contraction of that size is unprecedented in recent history and the centre predicts there will be 249,500 employees in Northern Ireland on furlough or temporarily laid off before the end of the year - the equivalent of almost half of all private sector jobs here, and an increase of 14,000 from the previous estimate.

Across the UK the report notes that 53% of hospitality firms and 40% of construction companies have reduced working hours, compared to just 14% in the information technology sector.

More than half of all firms in construction, transport, administrative services and water and waste management have laid off workers.

The four council areas identified as likely to be hit the worst have a concentration of jobs in construction, manufacturing, accommodation and retail.

"The position in Belfast and Derry City and Strabane may be different," the report states.

"The economic impacts are very significant for the council areas, but proportionally they are smaller than in other places.

"This is likely to be due to a diversity of sectors (particularly in Belfast), the proportion of jobs open to remote working and the proportion in sectors such as health and education."

The report predicts 67,000 employees to be laid off or furloughed in Belfast and 15,900 in Derry and Strabane, with economic output drops of 10.6% and 9.5% respectively.

Dr Eoin Magennis, senior economist with the centre and one of the authors of the report, said: "We are now looking at how quickly and safely economic and social activity can restart and what this may mean in the longer term for businesses, employees and communities.

"Though we have seen economic recovery in recent years it is still not known what shape the next one may take or when it might start.

"We also argue that any local response will have to equally take into account existing sectoral strengths and new opportunities to repurpose into new sectors.

"The tourism sector is a case in point and promotion of this to staycations or other replacements for international visitors will have to tap into local attractions.

"In a similar fashion we would argue that regeneration plans for town centres and re-skilling work should also draw on local assets to make these most appropriate to the different council areas.

"Finally, the partnership approach seen in Community Plans provides a good basis on which to build local policy response that can best reach those businesses, households and communities most in need of assistance at this time."

The report also notes that the Bank of England predicts the UK-wide peak unemployment rate will be 9.5%, but the Economic and Social Research Institute (ESRI) has predicted a much bleaker figure of 24% in the Republic.

Belfast Telegraph