The better the question. The better the answer. The better the world works. У вас есть вопрос? У нас есть ответ. Решая сложные задачи бизнеса, мы улучшаем мир. У вас є запитання? У нас є відповідь. Вирішуючи складні завдання бізнесу, ми змінюємо світ на краще. Meilleure la question, meilleure la réponse. Pour un monde meilleur. 問題越好。答案越好。商業世界越美好。 问题越好。答案越好。商业世界越美好。

Economic Eye
Autumn forecast
2019

Executive summary

Dealing with disruption

It would now appear that deal, no-deal or delay are all back on the table as possible Brexit outcomes. There is no precedent or knowledge bank to inform analysis of the potential impacts on the ROI and NI economies and as such, forecasts are subject to greater margins of error than usual. EY’s all-island forecast predicts 60,300 fewer jobs across the island by 2022 than otherwise would be expected in a no-deal outcome, although this forecast depends heavily on what happens in response to the economic fallout.

Both ROI and NI are performing better than most commentators expected. EY’s forecasts are modestly revised downwards from our summer report and ROI is widely expected to avoid outright recession, even in a no-deal scenario. Despite there being no government in NI, and the distraction that Brexit brings, firms across the island have enjoyed a remarkable growth story.

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Growth forecasts

EY growth forecasts
2019 2020 2021 2022 2023
ROI 3.7% 3.0% 2.8% 2.7% 2.4%
ROI MDD* 3.9% 3.5% 3.3% 2.9% 2.4%
NI 1.0% 1.1% 1.6% 1.6% 1.9%
UK 1.3% 1.5% 1.8% 1.9% 2.0%

Source: EY Economic Eye, UK ITEM Club

*Modified domestic demand removes the impacts of IP relocation and aircraft leasing, giving a more accurate picture of the domestic economy.


Brexit

Brexit has moved back up the corporate agenda in recent months. Our sentiment tracker suggests that it is now our client’s second biggest issue, behind sourcing talent. A similar trend is observed in a range of other trackers and there is an urgency amongst firms to both be ready and, where possible, to influence public policy responses. Worryingly, a significant number of firms appear unprepared. This is partly due to a lack of clarity on what no-deal might mean to them, and partly because the UK’s exit has been a long, drawn-out process.

EY growth forecasts (no-deal scenario)
2019 2020 2021 2022 2023
ROI 3.2% 1.3% 2.1% 2.6% 2.5%
NI 0.5% -0.6% 1.0% 1.1% 1.8%

Source: EY Economic Eye


Brexit not the only risk

Brexit is understandably centre stage in an all-island forecast report, but sadly, it is not the only cloud on the horizon. Growing economic and geo-political risks like trade wars, environmental concerns and pressure on public services are all major risks affecting economic growth in several key markets. Each of these is impacting business, government and consumer decisions and all place downward pressure on the forecasts. The backdrop of uncertainty and gathering storm clouds is undoubtedly as challenging as it has been for more than a decade.


Business resilience shining through the gloom

It is not all doom and gloom across the two economies, as both ROI and NI are performing better than most commentators expected. EY’s forecasts are modestly revised downwards from our summer report and ROI is widely expected to avoid outright recession, even in a no-deal scenario. Employment is at a record high and ROI growth for 2018 comfortably topped the European growth charts. Despite there being no government in NI, and the distraction that Brexit brings, firms across the island have enjoyed a remarkable growth story.


Labour market impressive

There are over half a million more jobs across the island than there were six years ago. Outside of public administration and agriculture, all sectors have increased their employment and every county has seen job growth. With real incomes now growing in both jurisdictions, the domestic economy is providing a significant boost to growth. Job growth is a leading economic indicator that politicians and the public recognise, and current levels are in stark contrast to a downbeat backdrop.

Download the full report for detailed forecasts and further analysis of Brexit, as well as key risks and opportunities as identified by our clients.

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