Belfast Telegraph

Northern Ireland's economic hopes for 2018

‘Stormont return is crucial to face huge challenges’

Theresa May, right, and European Commission President Jean-Claude Juncker prepare to address a media conference in Brussels after crisis talks over the Irish border
Theresa May, right, and European Commission President Jean-Claude Juncker prepare to address a media conference in Brussels after crisis talks over the Irish border

If 2018 is to be a year of success, then for the present we must hope that the collective efforts of our business community generate success locally and on the international stage. The year opens with a greater degree of uncertainty than other recent years.

The uncertainty of Brexit cannot accurately be assessed. The EU-UK negotiations have not yet shown how the trading problems will be tackled and solved.

What looks like a further two years of waiting for clarity from the Brussels talks is unwelcome to many businesses and, indirectly, may have adverse consequences on the labour market.

These Brexit uncertainties weigh heavily against the oft restated aspirations of the Brexiters. The Brexit deal, eventually, will give a shake to the economies of this island.

The deal to avoid a 'hard border' is still too imprecise to give full reassurance.

No 'hard border' is not the same as 'no border': the phase one declarations are welcome and point in a constructive direction. Sadly, they can be interpreted as ambiguous.

Closer to home, 2018 will be more comfortable if there is an agreement to put the Executive not just back in office but with a mutually agreed mechanism for joint working on a series of constructive policies for the economy and social questions.

The agenda is long and weighty: the solutions call for tough decisions to live within the available budget, some of which will bring initial discomfort to leave room for longer-term restoration of the economy.

This is a year when we should acknowledge the big challenges and help to build a momentum for a more competitive successful economy.

Further uncertainty, further drift and further inaction would all be very easy... but very damaging.

  • John Simpson is an independent economist

‘The Bitcoin and Chinese bubbles are sure to burst’

China will increasingly dominate the agenda.

This will include its growing political and economic influence, but it might also include the much-talked about Chinese credit bubble finally bursting.

Predicting when a bubble will burst is notoriously difficult, but I will be very surprised if Bitcoin prices don't come back down to earth with a bump in 2018.

In relation to Northern Ireland specifically, tourism will continue to be a major positive, with visitor numbers exceeding their 2017 record highs.

But households here will continue to be squeezed by inflation, subdued wage growth, public sector pay caps, and welfare benefit freezes.

Overall, 2018 won't surprise to the upside like 2017 did, with all of these headwinds acting as a drag on consumer sensitive sectors and the economy as a whole.

  • Richard Ramsey is chief economist at Ulster Bank

‘Global crises could offset any economic gain’

There are indications that the world economy will grow slightly faster in 2018 than in 2017 and 2016.

Part of that improvement could be in the US which will enable President Trump to claim, rightly or wrongly, that his economic policies have worked.

Nevertheless, there is capacity for the world economy to be knocked sideways.

One area of particular fragility is East Asia. Either China's credit expansion collapses in a manner similar to the Western banking crisis of a decade ago or there's a war in Korea.

I hope I am wrong but there are always black swan events - highly unpredictable but with potentially catastrophic effects.

Here in Northern Ireland, it's more of the same.

In the last month we have heard of large and chronic gaps in various parts of Northern Ireland's public services: hospitals, social care, schools and universities.

These problems will only get worse.

  • Dr Esmond Birnie is senior economist at the Ulster University Economic Policy Centre

‘Irish border deal has little chance of remaining‘

The compromise reached between the UK and the EU over the Irish border is likely to come unstuck in the new year.

In order to hold firm to her promise on the border, Theresa May would be committing the entirety of the UK to an ersatz customs union with the EU, and this is anathema to hard Brexiters.

They will figure this out eventually.

And if the Bank of England follows the logic it set out in November this year, 2018 may see another one if not two rate rises.

This will not cool inflation and will likely make things worse, but that hasn't stopped them before.

  • Paul MacFlynn is an economist at the Nevin Economic Research Institute (Neri)

‘Leaving EU will continue to steal the headlines’

Brexit will still dominate column inches,

However, progress will be made as the economic necessity of ensuring good trading conditions takes centre stage.

The job market will slow with employment levels close to static across the year as consumer pressures bite (I hope I am proved wrong in this regard).

Skills will continue to dominate firms' corporate agendas with shortages becoming a more widespread issue.

As a consequence, pay settlements will begin to accelerate in selected sectors and roles.

The best firms will continue to find opportunities where others see risks.

There will be increased merger and acquisition activity due to the unpredictability of Brexit and the associated uncertainty.

Pressures in public service will remain acute.

This will lead to a lively, and hopefully mature, debate regarding funding and charging options for education, the health service, utilities and transport.

The Executive will return - as I tell my children if you wish for something hard enough it may come true.

Neil Gibson is chief economist for EY Ireland

Belfast Telegraph