North to avoid recession but will be poorest performing part of UK
Uncertainty over post-Brexit Border could hit investment, PwC forecast suggests
Northern Ireland had been scheduled to introduce a new lower rate of corporation tax in April 2018 in a bid to lure additional inward investors
Northern Ireland is likely to avoid falling into a recession next year, but growth rates could slump to 0.9 per cent, down from 1.2 per cent this year, according to latest forecasts.
In its UK Economic Outlook published on Friday, PwC says the North will be the poorest performing part of the UK next year because of a combination of factors and an expected slowdown in consumer spending.
PwC partner in Northern Ireland David Armstrong also believes that investment intentions in the North could be dented by a combination of factors, not least of which is “uncertainty over the region’s budgetary position and a lack of clarity around a post-Brexit Border”.
Northern Ireland had been scheduled to introduce a new lower rate of corporation tax in April 2018 in a bid to lure additional inward investors to locate there and create new jobs. However, the ongoing political stalemate has placed the timetable for the introduction of the rate in some doubt.
Meanwhile, PwC’s gross value added (GVA) growth predictions for 2018 currently place Northern Ireland behind Scotland which is predicted to have growth of 1.1 per cent, Wales 1.2 per cent and dramatically behind the UK average of 1.4 per cent.
“The forecast slowdown in overall UK growth in 2018 is attributable to an overall downturn in business investment driven by continued uncertainty surrounding the negotiations to leave the EU,” Mr Armstrong said.
“We also expect a softening of jobs growth and a squeeze on real household spending power from rising inflation, which could reach around 3 per cent in 2018. But somewhat stronger net exports, helped by the weaker pound, should dampen the scale of the fall in overall GDP growth this year.”
He said that, given the “considerable uncertainties” that existed, Northern Ireland firms should stress-test their business and investment plans against a range of potential economic scenarios, including the as-yet-unknown Brexit implications.
PwC is forecasting that consumer spending growth in general will stall in the UK on the back of slower jobs growth and a weaker pound, which has pushed up import prices. All of this is likely to make everyday life more expensive in the North next year.