| 15.1°C Belfast

Northern Ireland economy ‘to grow by 6%’ after pickup in spending

But bank warns jobs may be lost as furlough scheme winds down

Close

Conor Lambe of Danske Bank

Conor Lambe of Danske Bank

Conor Lambe of Danske Bank

Northern Ireland’s economy has been tipped for growth of just over 6% in 2021 in an upgraded forecast from Danske Bank today.

The bank has revised up an earlier prediction of 4.8% growth to 6.2% as the economy recovers from the impact of Covid-19 and lockdowns. 

But it warned that uncertainty over the future path of the pandemic was a risk to growth. 

Chief economist Conor Lambe said NI’s performance was expected to mimic the UK, where available data has shown a steep rebound in activity in April and May. 

He added: “The reopening of non-essential retail and hospitality is providing an outlet for pent-up consumer demand, which has driven a pick-up in spending. 

“Assuming there are no further lockdowns and the rollout of the vaccine programme continues as planned, we expect the economy to continue expanding in the third and fourth quarters of the year.”

Danske Bank also predicts growth of 4.5% for the economy next year.  But the economy did shrink in the first quarter, while a lockdown imposed from December 26 continued, though growth was expected to have returned between April and June.

Weekly Business Digest

Margaret Canning’s selection of the must-read business stories straight to your inbox every Tuesday morning

This field is required

Mr Lambe said the Coronavirus Job Retention Scheme (CJRS), in which the government has paid 80% of the monthly wages of people whose jobs have been affected by lockdowns, had supported the job market.

At the last count, there were 99,400 jobs in Northern Ireland supported by the scheme.

However, from today, employers must start contributing 10% of wages, rising to 20% in August and September, before the scheme closes at the end of the month.

Mr Lambe said: “We expect to see a decline in the number of jobs as the scheme unwinds and then comes to an end in September, but are hopeful that the strengthening of economic growth and labour demand may limit the rise in unemployment.”

However, the bank has forecast that because of the withdrawal of support, the average number of jobs in Northern Ireland will fall by 1.2% in 20201, before growth of around 1% returns in 2022. 

And among sectors, it predicts that those which were hardest hit in lockdowns —  accommodation and food, plus arts and recreation — will have the strongest growth as they bounce back from restrictions, expanding by 19% and 15% respectively. 

However, despite their bounce-back, they would face falls in employment of around 6% this year.

Wholesale and retail would see growth of around 6.6% this year and 5.5% next year, as consumer spending grows.

Manufacturing and construction are also tipped for strong growth, partly because they had been less disrupted by the most recent lockdown early this year. 

However, they were facing other challenges, Danske Bank said, from rising costs and falling availability of raw materials.

 And they were also tipped to see jobs fall by 1% during 2021, though with growth to return in 2022.

Danske Bank said there would be strong growth in the professional services, and information and communication sectors.  


Privacy