Brexit caveat with positive forecast

Some 91,000 net additional jobs should be created by 2020 across a broad range of sectors if the current economic recovery continues — but all bets are off until Brexit becomes clearer.

That is the key finding of the EY’s summer forecast, which predicts GDP growth in the Republic to reach 2.6% in 2017, with an average growth rate of 2.6% per annum until 2020, which it says will be bolstered by continued consumer spending.

However, the country’s resilience and competitiveness will continue to be tested in the face of global and economic political developments, according to the forecast. Economic advisor to EY Economic Eye, Professor Neil Gibson said that with little clarity on Brexit, political uncertainty in Northern Ireland, and Irish GDP data being affected by a range of factors, all-island forecasting has never been more challenging.

“Six months on from our last forecast, there is no more clarity on exactly what shape Brexit will take, and in the absence of information on trade deals, customs and border plans, and migration policy, caution must be placed on any forecasts. The exit process for the UK is likely to be fairly bumpy, and although it makes clear economic sense to arrive at a sensible trade arrangement, that cannot be assumed,” he said.

“That said, the Republic economy is enjoying a sustained period of job growth, and a healthy balance between exports, consumer and government spending suggests that the economy is well placed to meet these challenges,” he said.

If Brexit was put to one side, the EY Economic Eye report said employment in all of Ireland was set to rise by 29,000 jobs in 2017. The Republic will however, fare better than Northern Ireland, it said, with almost 91,000 jobs forecast to be created by 2020.

Wholesale and retail could increase by 19,400 jobs and construction boosted by 18,500 jobs, according to the forecast. Inflation and wages data will be critical to watch in the coming months, said EY. Prof Gibson said: “If pay rates cannot keep pace with inflation, which is a possibility in the Republic and looks increasingly likely in the North, then the economic outcome could be worse than forecast.”

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