The previous EY Economic Eye, released in December 2016, referenced being published in what was felt to be the most uncertain economic climate in decades. Since then, it is difficult to comprehend that 2017 has already delivered two elections in Northern Ireland (NI) and that NI remains without an Executive. In the Republic of Ireland (ROI), 2017 has been relatively calmer, yet the country has just started a transition from Taoiseach Kenny to Taoiseach Varadkar which will no doubt present further change for the country.
In recent months, sentiment on the tone and outcome of the upcoming Brexit negotiations was coalescing around a hard Brexit. Since the UK general election, that direction seems less certain. Although Brexit out-workings will remain unclear for some time, there are examples of where Brexit related impacts are already being acutely felt, with shifts in inflation rates and exchange rate fluctuations being clear examples.
Amidst all the headline uncertainty, there are some contextual positives to draw on. For example, the IMF cites an upturn in global economic activity with increases in investment, manufacturing and trade all expected to drive global economic growth from 3.1% in 2016 to 3.5% in 2017 and 3.6% in 2018.
Cutting through all the noise created by elections and Brexit uncertainty reveals an island economy that does continue to grow. In 2017, total employment is expected to add 29,000 onto 2016’s figure with both NI and ROI expected to post increased job numbers. Beyond 2017, economic performance in NI and ROI diverges. By 2020, forecasts for NI suggest a decline of just 3,500 jobs from the 2016 position, with the largest declines expected in manufacturing and the public sector. In ROI, employment is forecast to be c.91,000 more in 2020 than 2016 with construction, retail and the health sector driving much of this growth.
This Economic Eye forecasts a tougher period ahead than in previous editions but the time ahead is not without opportunity amongst the challenges. Both jurisdictions have made progress in maintaining and improving competitiveness since the downturn. Firms have a role to play in all island economic competitiveness. Firms and policy makers need to be on the front foot, assessing new opportunities to enhance capacity and competitiveness, assess Brexit exposure and develop contingency plans around talent, tax, trade, tariffs and logistics. Pace is crucial as the landscape changes.Read the full report