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.
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.
If we consider politics over the past 10 years or so, what is clear is that there was a distinct step to the right in the UK, in the US and elsewhere in the world; the consensus around dealing with the fall-out of the financial crisis taking us in that direction. But there is evidence that we are now set for something of a left turn. And a look at the policies coming from the main UK political parties ahead of the General Election gives credence to this view.
Both Germany and the UK escaped recession, figures last week showed. But both have reason to be concerned about their near-term outlook. UK election campaigning suggests either a (i) large or (ii) enormous dollop of government spending is coming. Germany could do with either.
The 2019 General Election is officially underway, with politicians of all colours off in search of votes. At stake is not only the future of Brexit but of fiscal policy, our response to climate change and more besides. The UK economy looks pale and weak in contrast to the frenzy of activity amongst would-be-MPs. Business surveys suggest that output stagnated in October, while the Bank of England downgraded it’s growth forecasts, prompting two Monetary Policy Committee members to vote in favour of an immediate 0.25% rate cut.
The US Fed has made the third consecutive cut to its benchmark rate to 1.5 to 1.75%, but signalled that it does not expect a further cut in December. Chairman Jay Powell said that a preliminary US-China trade deal and lower risk of a no-deal Brexit had the potential to increase business confidence. So it’s a pause for now. How long will it last?
Overall, there was something for everyone in the latest deal. The backstop was binned, there will be no hard border on the Island of Ireland and the UK will be free to follow its own independent trade policy. There was some surprise that the UK Prime Minister was able to secure a deal so quickly. While the EU made some concessions, the movement in negotiations was primarily due to Boris Johnson removing some of the UK government’s red lines.
They say a week is a long time in politics and it can also be a long time in economics. Over the past seven days, we’ve had a wave of data released that tells us much about what happened in the third quarter of the year and how the local economy is currently performing.