A return of Stormont provided a confidence boost. But the honeymoon appears to be over. New Decade New Approach said all the right things but will positive actions follow? Optimists hoped the approach of the new Executive would be akin to Mario Draghi’s “do whatever it takes” commitment in 2012 for public services and the economy. Instead local politics quickly turned into Meatloaf’s “but I won’t do that”. With red lines drawn, ruling out water charges, increases in tuition fees and revenue raising, it looks a lot like the old approach.
The nearest thing Northern Ireland has to GDP (or official economic growth) figures was released today. The Northern Ireland Composite Economic Index (NICEI), revealed a 0.1% quarterly fall in Q3 with output up by a pedestrian 0.3% over the year. These figures conceal contrasting performance between the public and private sectors. The public sector component of the composite index, which is based on jobs, posted a 0.4% rise in Q3 – its fourth consecutive quarterly gain – and a 1.4% y/y increase. Following a decade of austerity, public sector employment is growing at its fastest pace since the last recession.
2019 was characterised by political deadlock, not least with Brexit uncertainty and Stormont inaction. But a week can be a long time in politics. Two buses came at once, with the EU Withdrawal Agreement Bill passing its third reading in the Commons and Stormont resurrected after its three-year hiatus. The local private sector ended the decade on a low but politics has begun the 2020s on a high. Let’s hope this newfound optimism lasts and can translate to the economy.
Today sees the release of December data from the Ulster Bank Northern Ireland PMI®. The latest report – produced for Ulster Bank by IHS Markit – signalled further reductions in output and new orders, but rates of decline softened. Meanwhile, companies increased their staffing levels for the first time in a year and confidence regarding the 12-month outlook for activity improved amid reduced uncertainty around Brexit. On the price front, the rate of input cost inflation softened again and companies lowered their output prices for the first time in over four years.
Last year was a record year for both the UK and Northern Ireland labour markets. Employment has never been higher and unemployment (for Northern Ireland) has never been lower. Given these labour market conditions one would assume that consumer confidence must be strong too? Not so. Previously having a job, or not having one, was a key determinant of whether a household or individual was in poverty. Over the last decade, however, a sustained period of below inflation wage growth and cuts to working-age welfare benefits has squeezed disposable incomes for those in work too.
Each December, we try to bring together some of the greatest minds in business and economics to review the year just past.
Unfortunately they’re never available. However, whilst you’re stuck with me, Richard Ramsey, we have been able to enlist the fantastic Stephen Kelly, Chief Executive of Manufacturing NI, and the incomparable Richard Johnston of Ulster University’s Economic Policy Centre to consider the good, the bad and the ugly of the NI, UK and global economies in 2019 and to speculate about who might be the economic villains of 2020.
We got together in Ulster Bank headquarters in Belfast earlier this week and covered a lot of ground… Have a listen and hopefully you find it useful and interesting.
Watch the podcast:
On-the-go? Prefer to listen to the review on SoundCloud?
Bye for now and have a great Christmas and New Year!
2019 was a year of heightened uncertainty. It was coming from the Brexit delays and negotiations, new resurgence in the trade wars and worsening global economic outlook. Locally, Northern Ireland notched up another year of Stormont in ‘cold storage’. 2020 has a busy brief locally, nationally and globally.
In contrast with weakness in the Eurozone the US labour market is still in rude health. November employment gains surpassed expectations by a wide margin, despite global trade and economic uncertainty. This will provide relief to the Fed, which has signalled it will pause before it provides any more stimulus to the economy.
Today sees the release of November data from the Ulster Bank Northern Ireland PMI. The latest report – produced for Ulster Bank by IHS Markit – pointed to sharper declines in output and new orders at Northern Ireland companies, as Brexit uncertainty continued to weigh on activity. Employment also decreased, albeit at a relatively modest pace. Meanwhile, the rate of input cost inflation remained marked, but efforts to stimulate sales led companies to raise their selling prices at only a marginal pace.