Belfast Telegraph

Investment 'being held back' by Brexit and lack of government

By Margaret Canning

The uncertainty over Brexit along with a lack of devolved government have led to a holding back of investment and lower consumer confidence in Northern Ireland, it's been claimed.

Danske Bank's Quarterly Sectoral Forecasts today estimate that the Northern Ireland economy will grow by just 1% in 2018, after expansion of 1.1% in 2017.

The bank's economist Conor Lambe said that without direct engagement in the talks over Brexit - due to Northern Ireland's lack of devolved government - policymakers were restricted in their ability to influence negotiations over the future of Northern Ireland's border with the Republic.

The forecasts predict a slowdown in the growth of new employee jobs this year from 1.4% to 0.3%.

And the overall number of jobs is forecast to fall by 0.1%.

But despite the anaemic rate of growth in the economy as a whole, all sectors in the economy except public administration and finance would see some kind of growth during the year, the forecasts say.

The information and communication sector will enjoy the best growth during 2018 at 3%, followed by administration and support, along with professional, scientific and technical services - which would both experience growth of 2.6%.

The wholesale and retail sector will grow by 1.5%, Danske Bank said.

However, there would be pressure on consumer spending, even with a gradual fall in inflation, with spending tipped to fall by 1%.

Other sectors reliant on discretionary spending - such as accommodation, restaurants and arts venues - would also experience a slowdown in growth in 2018.

Meanwhile, growth within manufacturing was estimated at 0.9% during 2017, with 2018 tipped for similar growth.

And construction growth for 2017, a year of strong activity in the building of new hotels and new homes alike, was revised up to 1.9%. However, expansion would shrink to 0.9% during 2018, the forecasts state.

The sector also drove jobs growth during 2017, with employment in the sector growing by 7.2% during the year - but the growth in building jobs would slow to 2.2% during 2018.

Mr Lambe said: "Northern Ireland experienced sluggish growth in 2017, with the economy estimated to have grown by just 1.1%. Looking into the year ahead, we expect growth to remain subdued and are forecasting a marginal fall in the growth rate to 1% in 2018.

"We expect inflation to fall gradually over the year ahead, but it is likely to remain above the Bank of England's 2% target and average 2.6% over 2018.

"We think that household spending power will remain under pressure as increases in the rate of nominal wage growth are unlikely to be enough to push real wage growth well into positive territory.

"With Brexit-related uncertainty also likely to persist, we continue to expect some firms to postpone capital spending until the UK's future trading relationship with the EU becomes clearer."

Mr Lambe added: "On Brexit, the months and years ahead will bring a new set of challenges, including securing a future trade deal, managing the UK's borders, devising a new approach to migration and replacing the plethora of other economic and non-economic arrangements currently existing between the UK and the EU."

Belfast Telegraph

Weekly Business Digest Newsletter

This week's business news headlines, directly to your inbox every Tuesday.