New era of household austerity awaits

We’ve heard lots of recent comparisons between today and 1976, given the heatwaves and drought that affected both years, and that 2022 is the UK’s driest year since. But whilst we have recently been basking in sunshine and dealing with the impact of the warm weather, it is the cost of heat, light and food for households this winter that should be on all of our minds.

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Despite recessionary chatter, labour market continues to churn out positives

Despite the upsurge in recessionary chatter, Northern Ireland’s labour market continues to churn out positive headlines. The ILO unemployment rate in the three months to April stood at 2.6%, just north of Q1 2020’s pre-pandemic level (2.5%) and the record low of 2.3% (Sep-Nov 2019). Both the HMRC payrolls data and the Quarterly Employer Survey (QES) posted record employee numbers for May and March 2022 respectively. Meanwhile there is still nothing of note on the redundancy front. From a recession watch perspective there is certainly ‘nothing to see here’ as far as the local labour market statistics are concerned.

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Northern Ireland’s economic miracle?

We saw further evidence last week in the form of the output figures for manufacturing and services that Northern Ireland’s economy has been outperforming the rest of the UK. This follows recent experimental data from ONS which showed Northern Ireland’s relative recovery from the pandemic has been second only to London. We also know that Northern Ireland has the lowest level of unemployment in the UK. So, is Northern Ireland experiencing some kind of Protocol-fueled economic miracle? The reality is, ‘it’s complicated’.

HAFNIA SOYA unloading oil at Belfast Harbour Northern Ireland
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Hiking season has begun… time to head for the hill

We’ve become well used to price hikes with rampant inflation, but last month was marked by tax hikes with the increase in National Insurance Contributions hitting the pockets of many employees as well as employers. The attention now though is very firmly on interest rate hikes with the Federal Reserve having just delivered its first 0.5% rate increase in 22 years with more to come as the Fed seeks to tame inflation which is at 40-year-high.

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The big issues we need an Executive in place to address

If the politicians can agree to form an Executive following last week’s election, there will be no shortage of major issues for the incoming Ministers to deal with. If a First and Deputy First Minster are appointed, the next step will be the allocation of Ministerial Departments. We are well used to Health being seen as the poisoned chalice but this time around, Covid and the cost-of-living crisis will mean that there are no easy briefs. Budgets across the departments will be under extreme pressure and every Minister will be severely challenged. The Executive is often criticised for being short-termist and putting off much needed reforms for the medium to long term. In this Assembly, the risk is that short-term pressures will completely drown out the focus on progressing other, strategic needs. So, it is more important than ever that an incoming Executive is focused, cohesive, and prepared to take tough decisions. Here are some of the major short and longer-term issues they will have to contend with.

Large orange plastic pipes for sewerage system.

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Not So Magnificent Seven (percent)

Even the proverbial dogs on the street are aware that consumer prices are rising.  However, the rate of acceleration in UK CPI is still taking seasoned economists by surprise. The annual pace of CPI inflation jumped from 6.2% in February (a 30-year high) to 7.0% in March (still a 30-year high) which was above the 6.7% projected by City analysts. On a month-on-month basis prices rose by 1.1% relative to February, matching the record month-on-month increase posted last October. 

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Bread and butter issues are local and global

Within all crises, there are opportunities, and people and companies change behaviours to adapt. During the pandemic, amidst all of the bad news, there were many positive stories of people pivoting to meet the challenge. There were a wide range of heroes, and this included companies – those producing PPE, those keeping the supply chains turning in food provision, and those enabling and supporting the vital digital transformation.

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What was in and more importantly what was left out of today’s Spring Statement

The background

This Spring Statement was initially supposed to be little more than an update on economic and fiscal forecasts. However, it has been overtaken by events; namely the cost-of-living crisis which has been exacerbated by the Russian invasion of Ukraine. As a result, the Chancellor, Rishi Sunak, has had to add a number of policy measures to today’s speech and to revisit some of the tax rises he announced last Autumn.

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