Page last updated at 06:50 GMT, Friday, 4 December 2009

N Ireland 'doing well' to recover lost jobs by 2015

Ulster Bank's George Best banknotes

Northern Ireland's economy will take several years to rise back to the levels before the downturn, an Ulster Bank economist has said.

In the bank's quarterly economic review, Richard Ramsey predicted NI would emerge from recession next year.

However, he warned that growth would be limited by inevitable cuts in public spending as well as factors such as the performance of the Republic's economy.

He said NI would be doing well to get back to peak employment levels by 2015.

Mr Ramsey predicted unemployment would peak at about 8.5% during mid-2010 and would remain relatively high for years to come.

Eventually some parts of our local retail sector will be left exposed when the current influx of RoI shoppers subsides
Richard Ramsey
Ulster Bank chief economist

The economy may be "moving out of intensive care" but the period ahead would be one of higher unemployment and rising taxes, he said.

He said the scale of impending public expenditure cuts were of major concern.

"There are short-term spending pressures, including funding the water charge subsidy, a civil service back-pay claim and a shortfall in capital receipts, running into several hundred million pounds," he said.

"And in the slightly longer-term, Northern Ireland will experience the biggest public sector expenditure cut on record.

"A reduction in expenditure of £730m, which some are predicting, would be the equivalent of shutting down the Department of Agricultural and Rural Development for three years."

'Economic fundamentals'

Mr Ramsey said the issue of public sector pay must be addressed to "ensure that public sector wages better reflect true economic fundamentals".

He said it was "extremely important" that Northern Ireland firms take advantage of the current weakness of sterling against the euro, as he believed this would be short-lived.

"Eventually some parts of our local retail sector will be left exposed when the current influx of RoI shoppers subsides," he said.

The strength of retail was one cause for optimism, he said, along with some areas of manufacturing.

He said food, drink and tobacco were performing particularly well, driven by the exchange rate.

Other positives were that unemployment would not hit levels experienced in the early 1980s recession as well as the return to growth in new house starts, mortgage approvals and new car sales.

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