Economists at the University of Ulster have predicted that Northern Ireland’s economy will likely avoid a recession in 2023, given its better-than-expected resilience. The UU Economic Policy Center has revised its previous forecast of a 1.2% contraction of economic output to now project that it will grow by 0.1% this year. However, they have warned that the medium-term growth is likely to remain sluggish, with less than a 2% annual growth projected through to 2027. The UUEPC Director, Gareth Hetherington, has emphasized the need for a strategic approach to public spending to ensure that Northern Ireland’s finances remain strong for the next three to five years.
According to Hetherington, the Northern Ireland economy has proven to be very strong and more resilient than many had expected at the beginning of the year. However, he has warned that the local economy will likely face challenges soon, with inflation getting stronger and interest rates rising. He emphasized that Northern Ireland’s finances will continue to be tight from now until 2027, indicating the need to adopt an approach and strategy similar to that used in the Republic of Ireland after the banking crisis.
The independent NI Fiscal Council has highlighted a growing likelihood that the decentralized funding formula, which provides per capita public spending in Northern Ireland, will fail to reflect the region’s needs. The council has calculated that to provide comparable public services, per capita public spending in Northern Ireland should be 24% higher than in England. The council noted that per capita spending on Northern Ireland is currently 23% higher than in England, adding that premiums could fall by 20% by the end of the decade unless there is a change in the public spending model.