The North will weather the recession best among the regions of the United Kingdom, according to a report published today.
The PricewaterhouseCoopers report published today forecast the North's economy would contract by 3 per cent and warned the economy may shrink even further if the recession worsens and the banking crisis continue.
However, the latest PwC Economic Outlook and Northern Ireland Economic Outlooksaid the North is still expected to perform better in 2009 than any of the remaining 11 UK regions. Some - such as the Midlands, North and North West of England - are forecast to suffer contractions of up to 4 per cent.
PwC expects the recovery in the North to start around the 3rd quarter of 2010 - but with average growth for 2010 slightly above zero.
In the short-term, PwC expects the UK economy to contract by 3.3 per cent in 2009 and to stay in recession until the third quarter of 2010, "although there is a significant downside risk that the recession could be even deeper and more prolonged".
The quarterly report says that 2008 saw the largest annual rise in unemployment since 1971, with the jobless total up by 7,400 in the final three months of the year and by 14,700 over the full year.
However, according to PwC chief economist Philip McDonagh, the labour force data also indicates the North is performing well relative to other UK regions and in historic terms.
Northern Ireland unemployment, at 5 per cent, is still well below the UK average of 6.3 per cent and remains the lowest of the UK’s 12 regions," Mr McDonagh said.
“While unemployment will rise sharply in 2009 - possibly to over 50,000 with the number of employees in employment also continuing to decline - we are not approaching anything like the levels of unemployment that Northern Ireland has experienced in the past,” he said.
“Grave as the problems are, Northern Ireland is less impacted than other regions of the UK or the Republic of Ireland and there are genuine opportunities to be grasped," he said.
“The greatest challenge over the next few months is to restore confidence and not to become paralysed into doing nothing by the prevailing mood of gloom and doom.”
The report also suggests that although average house prices fell by 28 per cent in 2008 - the worst fall since the 1980s - the end to this trend could be sight.
“Average house prices are now approaching the cost of construction, while the ratio of average house prices to average earnings has fallen sharply to the levels of the early part of the decade." Mr McDonagh said.
"Although the volume of transactions remains extremely low, they did increase in the last quarter of 2008, with over half of all sales relating to properties priced at less than £150,000."
