Spending Caution Points To Slow Down

It's a chilly outlook for Northern Ireland businesses in 2008 as an economist warns of tougher economic conditions in the coming year.

The property slowdown that marked the close of 2007 is expected to continue to impact on several professions this year, especially so on the smaller construction companies

Alan Bridle, Head of Research of Bank of Ireland, said the region's economic growth could slip from an estimated 3% last year, to closer to 2% in 2008.

Mr Bridle said a regional "credit-crunch" had already begun to bite in Northern Ireland in the last months of 2007.

He said his forecast was also influenced by the struggle of the US economy to stave off a recession.

Mr Bridle said there were a number of other reasons for a more sober overall growth assessment.

"Firstly, there is the beginning of a more austere public spending cycle as evidenced in the Draft Budget for Northern Ireland with an increase in real terms of little over 1%," he said.

"Secondly, there are cooler temperatures in our key external markets of Britain and the Republic of Ireland.

"Thirdly, the local property slowdown will have some broader negative impacts on certain professional and business services this year and on some of the smaller construction companies."

He said the final reason was that "local consumers may be more cautious in their spending because of increasing calls on household incomes from domestic rate bills, and higher food and petrol prices".

(BMcC)