Danske Bank expects Northern Ireland economy to grow by 1% in 2016

By John Campbell
BBC News NI Economics & Business Editor

  • Published
Angela McGowan
Image caption,
Angela McGowan is stressing that uncertainty surrounding economic forecasts is 'higher than usual'

Danske Bank has revised down its economic growth projections for Northern Ireland in 2016 and 2017.

The bank said the revisions reflect Brexit-related uncertainty, lower investment levels and higher inflation in the medium term.

The bank expects the local economy to grow by 1% this year and by 0.5% in 2017.

It had previously forecast growth of 1.6% this year and 1.9% in 2017.

The bank's chief economist, Angela McGowan, said she is stressing that uncertainty surrounding the forecasts is "higher than usual" as EU withdrawal negotiations are only set to begin early next year.

She cautioned that while the initial shock of the referendum result appears to have faded and given way to a more stable picture, that may be temporary.

Image source, PA
Image caption,
The Bank of England has indicated that it is ready to upgrade its short term growth forecasts for the UK economy

"The withdrawal from the EU has not yet happened and Brexit uncertainty could hit sentiment, growth and financial markets again when Article 50 is finally triggered."

Last week, the Bank of England indicated that it is ready to upgrade its short-term growth forecasts for the UK economy.

The bank's Monetary Policy Committee (MPC) expects that in the third quarter of this year (July to September) growth will be between 0.2% and 0.3%, compared to its August forecast of 0.1%.

'Weak pound'

Looking at 2017, the MPC says it is harder to make a judgement.

Ms McGowan said there is "no doubt" that the lack of clarity around future trade relations, access to skills, the border and future funding streams will all negatively impact investment and recruitment in the year ahead.

She said that should be balanced with the fact that "policy levers will be used to offset some of this damage and the weak pound should lift exports".

"The forthcoming Autumn Statement should be one of the most interesting for years," she added.