Public sector cuts will have sizeable impact: economist

Chief economist at the bank Richard Ramsey said the economic recovery has started but will be slow and uneven.

Speaking to local business representatives at the Clanree Hotel, he pointed out that whilst Northern Ireland's economy has returned to growth and the Republic of Ireland's is stabilising, both remain weak and will experience significant challenges in 2010.

Mr Ramsey was talking during a lunch briefing entitled: "The prospects for Economic Recovery at Home and Abroad and the Implications for Financial Markets".

He says that global economic conditions have been improving during recent months and key economies such as the US, the Eurozone and the UK have returned to growth.

This, he says, is encouraging, but other factors, such as necessary cuts in public spending in Northern Ireland and the fact that interest rates in both the Eurozone and the UK will likely rise later this year, will bring pressures.

Mr Ramsey continued: "In Northern Ireland, we estimate that the private sector emerged from recession in the final quarter of 2009. However, it is unlikely to be a straight-line recovery and we expect economic growth to be weak for the foreseeable future.

"A particular challenge for Northern Ireland is the necessary cuts in public spending that are coming down the line. Given the size of Northern Ireland's public sector, this will have a sizeable impact on the economy as a whole.

"The weakening of Sterling against the Euro, reversing a trend that has been to Northern Ireland's advantage in recent times, will also bring challenges - particularly for retailers in border areas of Northern Ireland and for the food sector.

"That said, we expect the Northern Ireland economy to record growth of 1.0% in 2010 which will be a marked improvement on the previous two years."