outlook spring 2016: a year of major change · 2015-2025 (selected sectors) ... manufacturing +4000...

2016-17 2017-18 2018-19 2019-20% change2016-20

9,745 9,821 9,828 9,854 1%OPERATINGSPEND(1)

1,010 1,036 1,073 1,126 11%CAPITAL SPENDING(2)

CHANGING FACE OF AUSTERITY2015 Spending Review - Northern Ireland Outcome (Cash Terms)

Source: NI Budget 2016-17Note 1: Non-Ring Fenced Resource DELNote 2: Capital DEL (excludes Financial Transactions Capital)

£m IMPACT OF CORPORATION TAX DEVOLUTION

NORTHERN IRELAND EMPLOYMENT FORECAST2015-2025 (Selected Sectors)

Forecast is for approx. 40,000 new jobs over the next 10 years building on approximately 45,000 net new jobs 2012-2015. Agriculture

+200

Manufacturing+4000

Construction+4400

Retail+1900

Transportation+3300

Public Admin & Defence

-6500

Education-1500

Health & Social Work

+3400

Arts & Entertainment

+4000

Info & Comms+4400

Accommodation+3900

Profess & Sci+8500

Admin Services+8100

Source: UUEPC

NORTHERN IRELAND GVA SECTORAL FORECASTS

20202019201820172016

1.6% 0.9% 1.6% 2.4% 2.6%PRODUCTION & MANUFACTURING

2.4% 2.9% 2.7% 2.2% 2.0%CONSTRUCTION

0.1% 0.9% 1.7% 0.9% 1.0%PUBLIC SECTOR SERVICES

2.4% 1.5% 1.9% 1.8% 1.7%

1.6% 1.3% 1.8% 1.7% 1.7%

PRIVATE SECTOR SERVICES

TOTALSource: UUEPC

UK INTEREST RATE FORECAST

20162015

2.5%2%0.6%0.5%

2020201920182017

UK INFLATION RATE FORECAST

20162015

1.7% 1.8% 2.4%1%0.8%0.1%

2020201920182017

BANK OF ENGLAND BASE RATES

UK CONSUMER PRICES INDEX (CPI)

2015

Source: UUEPC

10%

8%

6%

4%

2%

0%

Northern Ireland United Kingdom

GVA(1) g

rowth

rate

Unemplo

ymen

t rate

House

price

growth

GVA(1) g

rowth

rate

Unemplo

ymen

t rate

House

price

growth

GVA(1) g

rowth

rate

Unemplo

ymen

t rate

House

price

growth

GVA(1) g

rowth

rate

Unemplo

ymen

t rate

House

price

growth

2016 2017 2018 2019

NI ECONOMIC GROWTH TO BE RELATIVELY MODEST AS OVER RELIANCE ON CONSUMER SPENDING IS UNSUSTAINABLE

2.2%

3.3%

1.7%

1.3%

2.0%

3.7%

1.8%

5.4%

4.4%

1.8%

1.9%

4.0%

2.8%

2.8%

1.7%

1.9%

4.2%

3%

3%

8.2%

6.9%

1.6%

2.1%

2.2%

Sour

ce: C

BR -

UU

EPC

MACRO-ECONOMIC FACTORS IMPACTING UK/NI PERFORMANCE

Continued growth in China’s real economy despite volatility in global markets reaction.

Oil price collapse good for net importers (such as UK and ROI) but some emerging economies such as Brazil and Russia are dependent on oil exports.

Most likely to have bigger impact on NI compared to rest of the UK & ROI.

Growthin China

Oil Prices Potential Brexit

Previous UUEPC research estimated a reduction in Corporation Tax to 12.5% could create approximately 32,000 jobs on assumption that the cost to the NI Block grant would be funded through a reduction in public sector spending.

Reduction in

Corporation Tax

Operating spend is broadly flat in cash terms and will decline in real terms. However infrastructure spending is set to increase by 11% to over £1.1bn by 2020.

11% to over

£1.1Billionby 2020

OUTLOOK SPRING 2016: A Year of Major Change