Over 11,000 Northern Ireland jobs would go if there's a no deal Brexit: EY forecasts
Business advisers warn higher prices would also hit consumers
Northern Ireland could slip into recession in a no-deal Brexit with 11,400 job losses next year alone, according to a major economic report.
The EY Economic Eye today said the economy would end up around 2.7% smaller in a "significant" impact from crashing out without a deal with the EU.
EY chief economist Neil Gibson predicts that in a no-deal Brexit, Northern Ireland "could endure a period of recession" as trade complications and extra costs to consumers and businesses hit already weaker growth. And in a no-deal Brexit, there would be no transition agreement to cushion the economy.
EY also forecasts a fall in sterling's value in a no-deal would push up inflation, resulting in higher prices for consumers.
It comes after business group the CBI last month predicted that the economy here could be nearly £5bn less productive by 2034 after a no-deal Brexit.
EY’s Economic Eye — which also gives a forecast for the economy in the event of a trade deal being concluded — said a fall in sterling after a no-deal was one of the biggest risks.
“The projected fall in sterling adversely impacts on consumers through increased imported inflation which is a key factor in the forecast,” the forecast said.
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“The loss of 11,400 jobs in 2020 and an economy that is 2.7% smaller than it might otherwise have been is significant.”
Mr Gibson predicted jobs would be lost across all sectors, but particular those which were sensitive to consumer behaviour, such as retail, and jobs in agri-food.
However, the report said that the effects could be softened depending on how government and companies react.
In the event of a trade deal being reached, the report says that growth in the United Kingdom as a whole and in Northern Ireland will still be outpaced by the Republic.
The Republic’s growth for 2018 is tipped at 8.3%, though the rate will be more than halved to 3.9% this year, and 3.2% in 2020.
NI economic growth for 2018 is estimated at 1.5% — slightly better than UK growth of 1.4% — but will slow to 0.9% and 1.2% in 2019 and 2020 respectively.
EY also says that the Northern Ireland labour market is expected to have peaked in 2018, and will contract slightly by around 500 jobs in 2019 as retailing and industrial job losses feed through to the wider economy.
It said that Northern Ireland was not as well-placed at the Republic to withstand economic pressures.
“While the risks to the Republic of Ireland’s economy are mostly external, Northern Ireland faces greater internal risks due to less favourable consumer and government conditions.”