NI economic growth to fall below 1% by 2022: Ulster University think tank
Economic growth in Northern Ireland will slow to 0.9% by 2022, Ulster University's Economic Policy Centre has said.
The independent think tank has forecast that after reaching 1.3% in 2019, Northern Ireland's gross value added (GVA) activity will slow to a rate of 1.2% in 2020, falling to under 1% over the following two years.
The economic growth rate here traditionally lags behind the rest of the UK.
Ulster University's Economic Policy Centre (EPC) projects that after hitting 1.7% in 2019, the UK's GVA growth rate will slow to 1.6% next year and sink to 1.2% by 2020.
The research centre said while Brexit and the Stormont vacuum remain high on the economic agenda here, the ramifications of wider global concerns and geopolitical tensions are being felt.
Director Gareth Hetherington released the EPC's summer outlook yesterday, just hours after it emerged that the UK manufacturing sector plunged into decline for the first time in almost three years during May.
The IHS Markit/CIPS UK manufacturing purchasing managers' index (PMI) linked the decline to a halt in the industry's stockpiling push, driven in recent months by no-deal Brexit preparations by manufacturing firms.
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The results of the US manufacturing PMI were even more stark, with the headline measure falling to its lowest level since September 2019.
Mr Hetherington said that although much of the current economic data around Northern Ireland is reasonably positive, the overall outlook remains cautious.
"It seems, economically, that we are in a permanent state of anticipation. Both locally and internationally, we have spent the last few years waiting for something to happen," he said.
"We have been waiting for the return of Stormont, the Brexit deal to be agreed, productivity growth to finally pick up, an outcome to the US-Chinese trade dispute - the list goes on.
"These factors all create uncertainty, which is the enemy of business investment, and act as a brake on economic growth."
He added: "This is a shame because there are economic good-news stories to be shared. The local economy has now created over 78,000 jobs since 2012, across many sectors, with momentum in growth being maintained."
The EPC report said in the UK during 2018/19, VAT receipts were up by 5%, corporation tax receipts were up by over 6% and income tax and capital gains tax up by 8%.
As a result, the fiscal deficit is down to almost 1% of GDP, compared to 10% at the height of the financial crisis. Mr Hetherington suggested that the next Prime Minister will likely face pressure to loosen the purse strings, with Northern Ireland benefiting through the Barnett formula.
Elsewhere, Ulster University's EPC expects house prices to continue growing by 5.1% in 2019, before slowing to 3.4% next year and easing to 2.2% by 2022.
It also forecasts Northern Ireland's unemployment rate to continue on a downward trajectory over the next three years, although it expects employment growth to slow from 0.9% in 2018 to 0.2% this year, only picking up again in 2021.
Research by the centre found that part-time working here has increased by 16% in the last 10 years, with the use of temporary contracts rising by 29%. The EPC said its research suggested the significant increase was a matter of choice in most cases.