NI Economy Forecast To Grow By 1% This Year And Next According To Danske Bank

The Danske Bank has revised its forecast for 2026, saying that it expects the Northern Ireland economy to grow by 1% next year rather than the 1.4% that was previously predicted. However the forecast for this year is slightly more cheering, as they had expected 0.9% growth, but now they predict 1%.

As with all these things there are a myriad of what ifs and maybes involved, so you do have to take them with a rather large pinch of salt, however all things being equal it does give you a broad idea of where the economy is headed over the next year or so.

Interest Rates May Fall Further But Uncertainty Over Future US Tariffs

It is expected that interest rates will come down further, which will be a great help, however there is still the possibility of US President Donald Trump announcing a fresh bout of tariffs on whoever moves into his eye-line, which of course adds a huge element of uncertainty when trying to predict which direction the economy will go next.

Here is what Danske Bank chief economist Conor Lambe said about the forecast, as copied from an article in the Belfast Telegraph. He said:

“Global uncertainty levels have been particularly elevated during the first half of 2025 and this has likely been a contributor to the mixed performance of the economy.

“Looking forward, global uncertainty levels are expected to continue to weigh on economic activity, the Autumn 2024 Budget announcements have now taken effect and are putting pressure on business’ costs and inflation is running above target.

“The combination of these factors means that economic growth is projected to remain modest in 2025 and 2026.

“However, the expected continued easing of monetary policy is likely to give some support to consumer spending and business investment.”

The business services sector is forecast to perform the best over the next couple of years, with the unemployment rate rising slightly to around 2.2% next year.

Global Trade Policy Environment Remains Uncertain

Mr Lambe went on to say in the article that:

“The global trade policy environment remains highly uncertain while geopolitical risks and foreign policy uncertainty have also increased.

“There are a number of potential risks to the global economy stemming from elevated geopolitical tensions, including the war in Ukraine and developments in the Middle East.

“UK inflation has remained above its 2% target in recent months and was 3.4% in May. We expect inflation to remain above target and average around 3.2% in 2025, but there are risks around price pressures in the economy.

“Tight public finances and the limited headroom against the fiscal rules also means that the outlook for UK fiscal policy is uncertain. Should the 2025 Autumn Budget contain more tax rises or spending reductions, the performance of the economy could be adversely affected.”