Growth of NI econ­omy ex­pected to slow down, says Danske

Brexit fears and high in­fla­tion con­trib­ute to sub­dued mood

Belfast Telegraph - Business Telegraph - - Front Page - BY MAR­GARET CAN­NING

Brexit-re­lated un­cer­tainty and high in­fla­tion are ex­pected to con­trib­ute to a slow­down in eco­nomic growth here, ac­cord­ing to pre­dic­tions to­day.

Danske Bank’s lat­est sec­toral fore­casts pre­dict growth of 1% this year and 1.1% next year.

It pre­dicted a slow down in growth de­spite a pick-up in the pace of busi­ness ac­tiv­ity dur­ing the se­cond quar­ter.

Conor Lambe, Danske Bank chief econ­o­mist, said growth had picked up in the se­cond quar­ter as tem­po­rary ad­verse fac­tors — such as bad weather — which had hit the first quar­ter came to an end.

“How­ever, with above-tar­get in­fla­tion ex­ert­ing pres­sure on con­sumers’ pur­chas­ing power, and Brexit-re­lated un­cer­tainty weigh­ing on busi­ness in­vest­ment, we ex­pect over­all growth in 2018 to re­main rel­a­tively sub­dued at 1%, with only a mar­ginal in­crease to 1.1% next year.”

As busi­ness ad­vi­sory firm Grant Thorn­ton an­nounced 48 new jobs, Danske said the busi­ness ser­vices sec­tors were to un­der­pin eco­nomic growth in the next two years, with strong growth for the ad­min­is­tra­tion and sup­port sec­tor at 3.5% this year.

It pre­dicted that the in­for­ma­tion and com­mu­ni­ca­tion sec­tor would en­joy ex­pan­sion of 3.3% this year and 2.9% next year.

How­ever, con­struc­tion is tipped for more lim­ited growth at just 1% this year and next.

But while man­u­fac­tur­ing was pre­dicted to grow at just 0.7% this year, its rate of growth would dou­ble in 2019.

But the weak­est of all is pre­dicted to be pub­lic ad­min­is­tra­tion and de­fence, where out­put is tipped to shrink by around 1% this year and in 2019.

Mr Lambe said that the prospect of a no-deal Brexit was the big­gest risk fac­ing the econ­omy.

“It is now just un­der six months un­til Brexit for­mally takes place. How­ever, the UK and EU have still not reached a with­drawal agree­ment that would see the UK leave the Eu­ro­pean Union in a man­aged and orderly way,” he said.

“We con­tinue to be­lieve that the UK and EU will even­tu­ally reach an agree­ment.

“How­ever, at this stage it is un­for­tu­nately not yet pos­si­ble to rule out a no-deal Brexit tak­ing place in March 2019.

“A no-deal Brexit would un­doubt­edly lead to neg­a­tive eco­nomic con­se­quences for both North­ern Ire­land and the wider UK and, as such, it is the most sig­nif­i­cant risk fac­ing the econ­omy at this time.”

And de­spite the risks posed by Brexit, Danske Bank ex­pects to see con­tin­u­ing growth in the labour mar­ket, pre­dict­ing that em­ployee jobs will grow by 1.8% this year and 0.5% next year.

Pro­duc­tion jobs in fields like man­u­fac­tur­ing and wa­ter sup­ply would pro­vide the big­gest num­ber of new jobs, ac­count­ing for com­bined growth of just over 10%.

And de­spite well-doc­u­mented trou­bles for re­tail, Danske Bank pre­dicts jobs growth in the sec­tor of 1.3% this year and 0.5% in 2019.

It also pre­dicts only slight change in the un­em­ploy­ment rate at 3.9% this year and 4.2% in 2019.

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