Reports show North-South gap is widening

By Geoff Percival

The economic gap between the Republic and the North is widening, according to a new study by EY.

In it, the company has forecast economic growth of 4.9% in the Republic this year — in line with consensus — but growth of just 1.4% for the North. Of the 144,000 net additional jobs due to be created on the island of Ireland by the end of 2020, all but 6,000 will be in the Republic, EY said.

“Higher dependence on consumer and government spending in Northern Ireland, and very different inflation levels are creating divergence in spending power between the north and south, which is contributing to a weaker Northern Ireland outlook,” said EY Ireland’s chief economist Neil Gibson.

“A healthy labour market and low inflation are boosting the economy in the Republic, leaving the country in a position of strength to face the economic and geopolitical uncertainty that lies ahead. While the strength of the euro has a positive impact on exports, a more challenging environment pervades in Northern Ireland, which is not helped by the absence of a local government,” he said. Two other growth barometers also support the positive mood for the Republic’s outlook. The latest monthly savings and investments survey from Bank of Ireland and the ESRI shows an increase in sentiment towards saving money.

“The improving economic environment is helping sentiment,” said Bank of Ireland’s global investment strategist Tom McCabe.

However, the survey showed retirement planning remains a work in progress with just 11% of people feeling they are fully financially prepared for life after work.

Elsewhere, the latest construction sector purchasing managers’ index (PMI) from Ulster Bank — generally seen as the main barometer of health for the building sector here — shows November generated the fastest growth in building activity in five months, with improving economic conditions boosting client demand.

While builders’ confidence levels fell slightly last month, that was seen as being a dip from exceptionally elevated levels rather than any serious drop.

“Confidence levels remain solidly optimistic,” said Ulster Bank chief economist Simon Barry.


KEYWORDS: business, money, finance

 

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