Northern Ireland’s Fresh Start and the arrival of a 12.5 rate of corporation tax is set to “change the landscape for business grwoth and employment according to the latest forecast from business advisors EY.
However, the Economic Eye Winter forcast suggests there is an great deal of ground for the province to catch up as it puts growth at 1.7% in 2015 compared to three times that rate in the Irish Republic at 5.8 per cent.
The report marks a slight reduction in the Northern Ireland figure from 2.0 per cent in its summer forecast.
The Republic is leading the EU growth charts, with Gross Domestic Product (GDP) forecast to increase from 3.7 and and 3.0 per cent to 5.8 and 4.3 per cent for 2015 and 2016 respectively.
NI growth continues to be hampered by austerity measures and a relatively small private sector.
“Austerity is dampening domestic demand in Northern Ireland now in the same way it did in the Republic in recent years, and there have already been considerable job losses in the public sector as a result,” said Michael Hall, managing partner for EY Northern Ireland.
“We must offset this constraint by attracting more FDI in the private sector. This will be key to ensuring continued growth and uplift in employment in the coming years.’
The report refers to the positive impact of the ‘Fresh Start’ agreement from next year, but it is the corporation tax cut to 12.5 in the province in 2018 it says will clearly have the greatest impact.
“The reduction will greatly enhance NI’s ability to attract FDI and enable the indigenous companies to re-invest savings back into their businesses. Our poll showed that 50 per cent of respondents are ‘moderately optimistic’ about the prospects for business over the short to medium term – which reflects that some good steps have already been taken, but there is still work to do.”