Northern Ireland’s economy is turning the corner with growth of 1.4% forecast for 2024, a report has revealed.
And that would be stronger than the UK as a whole, which was tipped for economic expansion of just 1.1% this year, the Ulster University (UU) report said.
It predicted real wages growth of 2.3% for NI in 2024, with April’s boost to the minimum wage narrowing the gap between the highest and lowest paid.
The economy here has been buoyed by strong employment in areas such as transport, construction and health, UU said.
Its Economic Policy Centre said that a tight labour market meant the economy was dependent on migrant labour.
But it warned that with rules on migration gradually becoming tighter, it would become crucial to entice NI’s economically inactive people back into work in order to fill jobs.
Growth of 1.4% was higher than expected, said the centre, which also predicts expansion of 1.7% next year.
Economists at the centre said the outlook would benefit from lower interest rates, with two quarter-point cuts to base rate anticipated over the rest of 2024.
In the next few years, it predicted that the Bank of England would then set interest rates at around 3.5%, higher than the low rates experienced throughout the 2010s.
But it warned that the benefit of the rates cuts would only boost the economy for a short period before stronger productivity growth would then be required.
The centre said that boosting productivity should be a priority for the NI Executive and the new UK Government.
And while NI’s growth would outshine the UK in 2024, the UK was expected to overtake us in 2025 and 2026.
Dr Myles Patton, principal economist at the centre, said: “Several factors have allowed Northern Ireland to perform relatively well this year.
“Looking ahead, however, our tight labour market, ongoing economic inactivity and modest productivity levels will limit our future economic success.
“A broad range of policy interventions are required to create the conditions for sustained economic growth going forward.”
While wages had been rising, the centre said higher inflation meant wages weren’t keeping up with cost-of-living pressures.
Only full-time males had seen their real wages increase in 2023, with others experiencing a decline. In particular, female part-time workers had seen their real wages decrease by 4.7% in 2023.
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The Economic Policy Centre warned that without an increase in productivity, annual real wage growth would return to 0.6% a year, similar to the growth rate of much of the last decade.
Dr Patton added: “The close correlation between productivity and wage growth reinforces the need for policy makers in both the new NI Executive, and the new UK Government, to focus on measures that boost productivity levels, including capital investment and ongoing development of the skills base.”
The centre said that around 51,000 of the 320,000 people classed as economically inactive (meaning not in work or available to work) felt there were barriers facing them returning to the labour market.
It said that that group of “hidden unemployed” were the “largest pool of untapped labour” in the economy.
Dr Patton added: “This diverse group require a broad range of supports depending on individual circumstances, such as help with childcare, addressing health problems and raising their employability skills.
“If their participation in the labour market is not facilitated, local firms will continue to experience labour market shortages that will ultimately hold back growth and waste the potential of our people.
“Northern Ireland’s future success is dependent on promoting inclusive growth, ensuring access to good jobs and opportunity for all groups across the region.”