Page last updated at 05:45 GMT, Tuesday, 22 September 2009 06:45 UK

Executive is warned over economy


The Northern Ireland Executive should be more proactive in response to the economic downturn, a senior economist has said.

Mike Smyth, of the University of Ulster criticised local policy-makers in the First Trust Bank Economic Outlook.

Mr Smyth said the NI Executive should follow the example of their Scottish counterparts.

He said they should "start the ball rolling" by initiating a review of the programme for government and budget.

"While in Scotland, the executive produced a national recovery plan in August 2008, which has since been revised as national and international economic conditions have altered, local policy-makers have been less proactive by comparison," he said.

"The programme for government and budget remain largely unchanged since their publication in January 2008 with only some limited responses from individual departments."

Mr Smyth said the latest evidence suggested the Northern Ireland economy has been less severely affected by the economic downturn than many other regions of the UK and the Republic.

However, he said "the likelihood of future national spending cuts post-general election means the Executive will finally have to make some difficult decisions about public services, as well as about NI's investment strategy and wider public sector employment."

He said there were some signs that consumer and business confidence were now less weak in Northern Ireland.

Consumer confidence, particularly as shown by the housing market may be "on the turn" and the service sector has steadied with recovery likely to get under way in the second half of 2009, Mr Smyth added.

Among the key points of the economic outlook were:

  • There is good chance of a return to positive economic growth in 2010 - albeit of a modest 0.5% in terms of GDP.
  • Consumer confidence remains feeble and the outlook for spending remains subdued. However, consumer confidence as evidenced in the housing market may be on the turn as house prices appear to have bottomed out.
  • Public expenditure cuts after a general election look increasingly inevitable.
  • Sustained cross-border shopping continues to head off even more serious decline in consumer demand.
  • Unemployment, which reached 51,000 or 5.9% in July 2009, is likely to rise to over 60,000 in 2010. However, it should be remembered that during the last recession in the early 1980s unemployment peaked at 125,000.

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