Uncertainty is certain
Winter Forecast 2016
EY’s Economic Eye winter forecast is published in what is arguably the most uncertain economic climate in decades.
The UK’s decision to leave the European Union and Donald Trump’s election as US President raise many questions about trade terms which the all island economy will operate under, and the extent to which inward investment will continue to flow.
This uncertainty is showing through a weakened Sterling which is already shifting trade patterns in Northern Ireland (NI) and the Republic of Ireland (ROI).
While current uncertainty has tempered forecasters’ optimism, the island economy has shown significant resilience this year, with expected all island growth of 3.7%. A slowdown is expected though over the next three years, before picking up again, as uncertainty clears and trade deals firm up.
NI’s and ROI’s economic fortunes are expected to diverge.
ROI’s labour market should continue growing, with NI’s expected to decline. In ROI, agriculture and manufacturing are expected to shed a combined 15,000 jobs, but strong growth across the rest of its sectors will deliver over 100,000 net new jobs by 2020.
NI’s forecast takes a ‘hard Brexit’ view, and factors in a 2017 consumer spending decline. Ongoing public spending constraints also affect NI’s labour market prospects, and the forecast suggests an employment decline of around 6,000 by 2020. Bright spots in the forecast include administrative support and ICT jobs, which, combined, could add 4,000 jobs.
2016’s events will produce economic discourse for years. As we head into 2017, several key economic issues will come into focus: will inflation lead to a shift in consumer sentiment and spending? Will pay restraint – particularly in the public sector – last, or will industrial action increase? How will Sterling hold up as Brexit nears? What will inward investment and business sentiment do? Uncertainty looks set to continue.
Read the full report 877K, December 2016