Economic study predicts modest growth for NI

Northern Ireland's economy will only grow by an average of 1.2% a year over the decade, a new analysis suggests.

The growth estimate is the first output of a major project to improve the understanding of the local economy.

The work involves Dublin's Economic and Social Research Institute (ESRI) and the UK's National Institute of Economic and Social Research (NIESR).

They have developed a macroeconomic model for Northern Ireland, a tool which can help estimate the impact of different economic policies.

Adele Bergin, associate research professor at the ESRI, said the model could "provide key insights into the impacts of potential shocks and policy changes".

Economic models generally consist of a set of mathematical equations that describe a theory of economic behaviour.

Economists can then plug data into the model to get projections of how the economy will perform under different circumstances.

The ESRI maintains a model of the Irish economy, known as Cosmo, while the NIESR's NiGEM model is used globally by policy makers and the private sector.

The two organisations used their expertise to develop a model to deal with Northern Ireland's particular characteristics.

"Northern Ireland is in the unique position of being part of the EU single market while remaining within the UK fiscal, welfare, and monetary unions," Stephen Millard, from the NIESR, said.

The model estimates that the NI economy will perform relatively well in 2025 with growth of 1.7%.

That is based on a projection of average wages rising faster than inflation, helping to boost consumer spending.

Growth is then expected to slow over the rest of the decade, giving an average growth rate of 1.2% between 2023 and 2029.

The model has also been used to estimate the impact of various hypothetical scenarios for the Northern Ireland economy, such as devolving and increasing income tax.

It suggests that using increased tax revenues to invest in infrastructure would lead to a sustained improvement in economic output and a marginal fall in employment.

The project has been funded by Ibec, Ireland's major employer's organisation.

Its chief executive Danny McCoy said the model would "serve as an invaluable resource for policymakers in Dublin, Belfast, and London, as well as for public and private sector enterprises operating on both sides of the border".