Belfast Telegraph

Report warns Brexit uncertainty to subdue growth of economy

Ryan McAleer

By Ryan McAleer

Economic growth in Northern Ireland is likely to remain subdued while uncertainty remains over Brexit, a report from Danske Bank has said.

The bank's latest quarterly sectoral forecasts report revealed a slow start to 2018, with the economy expected to grow by just 0.9% this year and 1.1% in 2019.

It compares with the modest forecast of 1.3% GDP growth across the UK in 2018 and 1.4% in 2019.

Danske Bank does expect the average rate of jobs growth to be positive this year and next.

The number of jobs is forecast to increase by 0.7% in 2018 and 0.2% in 2019.

The bank's chief economist Conor Lambe said Northern Ireland experienced a "sluggish" start to 2018 as a result of above-target inflation, adverse weather conditions and continuing political uncertainty.

"Both the lack of an Executive and Brexit, acted as a drag on growth," he said.

"The economy is expected to perform slightly better in the rest of the year but consumers and businesses are still facing challenges.

"Household spending power is slowly recovering but consumers remain under some pressure and heightened uncertainty surrounding Brexit is negatively affecting business investment.

"These factors are likely to lead to underwhelming economic growth in both 2018 and 2019."

The economist said the healthy rate of jobs growth remains the main positive note from the start of this year. Danske Bank has recorded the highest annual increase in the total number of jobs since the series began in 2005.

"Given this strong data, we have revised our forecast for employment growth in 2018 upwards from 0.4% in our last report to 0.7% in the latest release," Mr Lambe said.

Danske Bank's report has indicated that the services sector should continue to underpin growth in Northern Ireland, with the strongest performances forecast in administrative and support sector, along with the information and communication sector, which are expected to see growth of 3.1%-3.5% between this year and next.

Manufacturing appears the hardest hit by the Brexit uncertainty.

Growth in 2018 is forecast at just 0.7%, rising to 1% in 2019.

Belfast Telegraph