The Northern Ireland economy is weathering a sustained fiscal storm as 2024 draws to a close, economists at Ulster University can reveal.  

Publishing the December 2024 Outlook, economists at the Economic Policy Centre say the local economy has had a relatively strong 2024, particularly in the first half of the year when it exceeded UK performance, yet recent indicators point to slower growth in the second half of this year. 

Additional borrowing and spending announced in the UK Budget will increase growth in the short term, but looking ahead, this raises inflation expectations and interest rates. With higher taxes coming, particularly National Insurance Contributions, lower growth can be expected in the medium term. 

For 2024 as a whole, GVA growth of 1.9% is forecasted, which has been helped by a local labour market that has continued to perform strongly. Long-term employment growth will continue, the economists expect, but at a reducing rate. Given the already low level of unemployment and greater constraints on immigration, such growth will require an ability to transition individuals out of economic inactivity and into the workforce. 

Forecast by Sector 

The economic outlook for Northern Ireland’s key sectors presents a mixed picture, with both challenges and areas of growth.   

The construction sector has been through a challenging period, but more recently has started to recover, with workforce jobs increasing by 16.3% over the 12 months to June 2024. Increased capital spending announced in the UK Budget, should help underpin recovery in the medium term but his requires appropriate infrastructure investment decisions by the NI Executive.  

Private sector services have also outperformed the UK in terms of output and employment, employment in the last year, particularly in retail and professional services. Despite business confidence being subdued, the Bank of England’s rate reduction cycle offers some optimism for continued consumer confidence and sectoral growth. 

In the public sector, additional funding of £1.5bn for Northern Ireland announced in the recent Budget will be crucial for addressing pressing issues across health, education, and infrastructure. Notably, NI Water’s 6-year business plan (2021-27) highlighted plans for £2.1bn investment during this period, which is essential to lift constraints on development projects across NI. 

However, the public sector still faces significant challenges, particularly in healthcare with long waiting lists and the need for reform to manage a growing older age population. The education sector also faces pressures with declining pupil numbers and an estate in need of modernisation. 

More broadly, changing demographics also implies an aging profile of the labour force, with those in their 20s expected to fall by 17k and those from 61-66 expected to increase by 16k by 2050.  This may require employers to consider more flexible working arrangements and greater emphasis on training and development to keep older workers in the labour market for longer. 

Dr Myles Patton, Principal Economist at the Ulster University Economic Policy Centre, said:  

“Despite considerable economic turbulence, the Northern Ireland economy has displayed robust strength and performed relatively well in 2024, largely due to the local labour market with increasing workforce jobs underpinned by expansion in the professional services, manufacturing and health sectors. Looking ahead growth is expected to slow but if the NI Executive make the right economic focused investment decisions, recovery can be expected in the medium and longer term. ” 

Read the full Ulster University Economic Policy Centre: December 2024 Outlook report

Key Forecasts 

Northern Ireland (NI) 

United Kingdom (UK) 

Macro-economic variables 

Source: UUEPC, OBR