5 days Ago
But its latest Northern Ireland Quarterly Sectoral Forecasts predict that economic growth would pick up next year, with expansion of about 1.4% on the cards. It said that falling inflation, strong wage growth and the gradual decline in interest rates would lend some support to consumer-facing parts of the economy.
It predicted that output in the accommodation and food service sector would expand by around 1.5% in 2024 and by about 1.7% in 2025.
The wholesale and retail trade sector is forecast to expand by around 1.4% in 2024, with the arts, entertainment and recreation sector coming close with expansion of 1.3%.
Both sectors are then tipped to grow at an even stronger pace than the overall economy next year. However, while interest rates have coming down, the Bank of England base rate remains relatively high at 4.75%.
And businesses are also bracing themselves for the impact of rising employer national insurance contributions, announced in the Budget over the autumn. Conor Lambe, chief economist and head of strategy at Danske Bank, said: “Looking forward into 2025, we expect the pace of growth to increase as closer to target rates of inflation and continued loosening of monetary policy provide some support to consumer expenditure while the measures announced in the Budget are also likely to lead to higher levels of government spending. “However, despite expectations of continued easing, Bank of England bank rate is still expected to remain relatively high and the increase in tax announced within the Budget is also likely to lead to challenges for businesses.
” According to Danske Bank, the business services sectors will grow at relatively strong rates. The professional, scientific and technical services sector is expected to be the fastest growing in Northern Ireland with output rising by around 1.8% in 2024 and 2.
1% in 2025. The information and communication and administrative and support services sectors are expected to experience growth of about 1.4% and 1.
5% respectively this year, then 2% and 1.9% next year. Output in the manufacturing sector is projected to increase by around 0.
8% in 2024 and about 1.4% in 2025. Construction is also expected to see the pace of growth increase next year, from around 0.
9% in 2024 to about 1.5% in 2025. Danske Bank said it expects the labour market in Northern Ireland to soften slightly but remain in a relatively robust position with the annual average number of employee jobs projected to increase by about 0.
9% in 2024 and by around 0.8% in 2025. It predicted that the unemployment rate in Northern Ireland will average around 2.
1% this year, before rising to an annual average of about 2.5% in 2025. But the bank warned that there were risks and uncertainties arounds its forecasts.
Mr Lame said “We expect annual inflation to remain slightly above target and to average around 2.4% next year but there are risks to the outlook for the pace of price rises. "The higher taxation announced in the Budget could also weigh more heavily than expected on businesses.
"In addition to this, many firms across the economy are still struggling to fill job vacancies with the skills they require, and geopolitical uncertainty is currently particularly elevated.”.
