Brexit one of ‘biggest risks’ facing North’s economy - report
Referendum could drag down investment levels, Danske analysis finds
UK prime minister, David Cameron and Taoiseach Enda Kenny as they prepared to discuss Brexit late last year Photograph: PA Wire
The forthcoming Brexit referendum in the UK has the “potential to drag down investment levels” in the North and is one of the “biggest risks” facing the economy, a new report has warned.
The report from Danske Bank finds that the prospect of Brexit - a British exit from the EU - is creating a level of uncertainty that could unnerve potential investors not just in the North but across the UK in the approach to the referendum.
The UK vote is scheduled to take place by the end of 2017, around which time local investment agencies will be busy selling the advantages of Northern Ireland’s new lower rates of corporation tax which are set to be in place by April 2018.
According to Danske’s latest Quarterly Sectoral Forecast report, the economic recovery unfolding in the North is in general expected to continue steadily this year.
But the bank’s chief economist, Angela McGowan, said the pace of growth is unlikely to be “overly exciting”.
“The annual growth rate is expected to be around 1.8 per cent. There are, as always, a small number of sectors that will grow at an ‘above average’ rate and of course the public sector will continue to shrink,” she said.
Danske believes that projected public sector job losses will badly affect consumer spending in the North, which is expected to be muted in the second half of the year as more cut backs are implemented.
However Ms McGowan expects that some high growth sectors such as ICT (which is predicted to grow by 4.8 per cent) and administration & support services (4.3 per cent) will deliver a robust performance.
But manufacturing, Northern Ireland’s second largest sector in output terms and third largest in terms of employment, is not expected to perform quite as well.
Danske predicts it could potentially grow by 1.9 per cent this year but also warns that it is a sector that has been under significant pressure during 2015 because of weak world demand and the strong pound.