Northern Ireland’s economy is predicted to grow by a modest 0.8% this year while fewer companies say they have serious concerns around the risk of Brexit on business, according to a new report.
The latest EY Economic Eye said a planned increase in government spending and high levels of job growth would prevent the economy here from shrinking. It said the 0.8% marked just a slight downgrade in its forecast.
Growth in 2021 and 2022 was projected to pick up to 1.3% and 1.5% respectively. However, the expansion was dependent on the securing of a free trade agreement with the EU.
It’s predicted IT will be the main driver of growth in the jobs market, adding 30,000 jobs across the island over the next five years. Northern Ireland’s projected growth is behind expansion of 3.4% forecast for the Republic in 2020, and 1.2% in the UK.
Professor Neil Gibson, chief economist, EY Ireland, said the economies of Northern Ireland and the Republic had been dominated by political developments. Contrasting growth levels had also led to contrasting election results.
And he said the New Decade, New Approach deal which restored power-sharing reflected a change in voter priorities. “In the UK, the Conservatives secured their biggest majority in a generation with growth barely topping 1% and in the Republic the incumbent government could not secure a majority with headline growth rates of well over 5%.
“This speaks to a long-standing disconnect between headline growth and the citizen experience and we are likely to see a focus on public services, quality of life and what can be characterised as more internal, or personal, outcomes gather than a singular drive for growth and globalisation.
“This has already been seen in the New Deal, New Approach document. It is the nexus of economic, social and environmental considerations that is creating a new paradigm and shaping the political landscape.”
EY said that a notable pick-up in business sentiment in early 2020 reflected a feeling that the worst of Brexit is over after the UK left the EU on January 31. But Michael Hall, managing partner at EY NI, said that while firms were hopeful there would be a free trade agreement, they should also be prepared for anything.
“Dealing with Brexit is identified as the second biggest risk for business in our recent client survey, but notably it has fallen in prominence from 56% to 45%, reflecting the mood amongst firms that Brexit is now official,” he said.
“Firms are optimistic in their outlook for a free trade agreement but they must still prepare for a host of potential outcomes. Adaptable plans and flexibility should remain a top priority in preparing for a post-Brexit island.”