Economic Contexts, Outlooks and Considerations - PowerPoint Presentation

Slide1

Economic Contexts, Outlooks and Considerations

December 2018

@UlsterUniEPCSlide2

Contents

Northern Ireland economic context and outlook

Causeway Coast and Glens District Council contexts

Historical Trends

Economic OutlookAppendix / Annex UUEPC forecasts and scenariosGlossarySlide3

NI:

Economic Context and OutlookSlide4

Output at a record high

NI accounts for 2% of total UK GVA, on average

Real GVA has increased by £9bn since 2001 with the current level being £36.4bn (2016)This is set to increase to £39.6bn by 2027While in the upper & lower scenarios real GVA is set to increase to £41.5bn & £38bn by 2027 respectively

Real GVA (£

bn), NI, 2001-27Source: ONS (Regional Accounts) & UUEPC Autumn 2018 NI ModelAnd set to continue for the next decade Slide5

Real GVA growth rates (%)

Growth over the next decad

e to be faster compared to the previous decade but still rather subdued

Annual growth in NI is expected to average 0.8% over the 2017-27 periodMuch slower than historical levels (1.1% between 2001-17)

But faster than growth between 2006-16 (0.4%)Real GVA growth rates (%), NI, 2001-27Source: ONS (Regional Accounts) & UUEPC Autumn 2018 NI ModelSlide6

A mixed picture for NI in terms of employment & productivity growth

Manufacturing: A high productivity & growing sector? An advanced manufacturing

growth story?

Average productivity in 2017 was £41,700 and set to grow on average at 0.6% over the 2017-27 periodManufacturing is a high productive sector (£56,000) in 2017 with productivity forecast to be £60,000 by 2027

The financial sector productivity is forecast to have a productivity of £68,000 by 2027, but an expected employment fall of 5% over the next decadeWorkplace employment total, productivity & employment growth (%) by sector, NI, 2017-2027Source: ONS (Regional Accounts), NOMIS (Workforce Jobs) & UUEPC Autumn 2018 NI ModelSlide7

Employment at a record high

And set to continue to increase over the next decade despite difficulties

Employment is forecast to increase from 877,000 in 2017 to 898,000 in 2027

The upper scenario forecasts that employment will reach the ambitious level of 935,000 by 2027

The lower scenario forecasts that employment will fall to 866,000 by 2027Total workplace based employment, NI, 2001-27Source: NOMIS (Workforce Jobs) & UUEPC Autumn 2018 NI ModelSlide8

NI has seen a considerable employment gain over the last 16 years

But a high level of n

et losses in the Manufacturing sector

100,000 net employee jobs were added to the NI economyThe private sector was the main driver of employment creation 80% of additional employment

28,000 employee jobs were created in the heath sector 2001-17The manufacturing sector has suffered the most over this period with a net employment loss of 12,000 – due to more automation Net workplace employment change by sector, NI, 2001-17Source: NOMIS (Workforce Jobs) & UUEPC AnalysisSlide9

Sectoral employment change

Highest

Net Job Losses in Agriculture & Retail

21,000 net new jobs are forecast to be created by 2027

Strongest growth in Services such as ICT and Professional/Technical but also a recovery in Manufacturing (+4,000 jobs)The Agriculture and Retail sectors are forecast to suffer the most over this period with a net loss of 8,000 jobs between the twoNet workplace employment change by sector, NI, 2017-27Source: NOMIS (Workforce Jobs) & UUEPC Autumn 2018 NI ModelSlide10

NI the happiest place in the UK

NI is the happiest, most worthwhile & best for life satisfaction as well as place with the lowest anxiety in the UK

NI ranks the highest for the number of people of all UK regions for life satisfaction (36.7%), worthwhileness (43.7%) & happiness (41.6%)

NI ranks also the highest level of people who have low levels of anxiety (47.1%)

Well-being indicators (life satisfaction, worthwhileness, happiness & anxiety), UK regions, 2017-18Source: ONS (Well-being survey) & UUEPC Autumn 2018 NI ModelNote: % show the % of people who answered 9-10 (life satisfaction, worthwhile & happiness) & 0-1 (anxiety)Slide11

Causeway Coast & Glens:

ContextsSlide12

Causeway Coast & Glens:

Historical TrendsSlide13

Current employment levels well below peak

But there has been a bounce back in last couple of years

Source:

NISRA (BRES) & UUEPC Analysis

Total workplace employment, Causeway Coast & Glens, 2001-17Employment has increased by over 400 since 2001 with employment in 2017 being almost 52,000The 2017 levels almost 4,000 below the 2006 peakA 1% increase in workplace based employment in recent yearsSlide14

Causeway Coast & Glens recovery still to take full effect

Around 800 jobs created since 2012

Total workplace based employment (net change), Causeway Coast & Glens, 2001-17

CC&G since 2012 has created 800 jobs – over 3,000 less than was lost during the recession

The recession did have a big effect on the council with losses totalling 3,900Growth in last five years has been weak in general but Tourism & Manufacturing have led the way – the first part of an increase over all three time periodsSource: NISRA (BRES) & UUEPC AnalysisSlide15

Real GVA has slowly recovered since the recession

Source:

ONS (Regional Accounts) & UUEPC Analysis

Real GVA (£

bn), Causeway Coast & Glens, 2001-16Real GVA currently is £2bn (2016) in CC&GUp from £1.9bn in 2001 a gain of almost £100m in the last 15 yearsIn part due to the attraction of more tourists through a thriving tourism industryBut growth has dropped off in last yearSlide16

Growth almost on par with pre-recession growth

Real GVA CAGR (%), Causeway Coast & Glens, 2001-17

CC&G average real GVA growth since 2001 has been 0.5% per annum

CC&G real GVA has slowed since the recession – but growth levels are almost at pre-recession rates!

Construction & Manufacturing are leading the way 9.9% & 8.2% per annum since 2012Source: ONS (Regional Accounts) & UUEPC AnalysisSlide17

Causeway Coast & Glens one of the best places to live for quality of life!

CC&G is the second happiest, most life satisfying, life fulfilling (worthwhileness) place to live in all of NI

As well as being the council with the lowest levels of anxiety out of all councils in NIA reflection of the lifestyle?

Well-being indicators (life satisfaction, worthwhileness, happiness & anxiety), NI LGDs, 2017-18

Source: ONS (Well-being survey) & UUEPC AnalysisNote: % show the % of people who answered 9-10 (life satisfaction, worthwhile & happiness) & 0-1 (anxiety)Slide18

Causeway Coast & Glens unemployment compared to NI average

Claimant unemployment fell to 2.8% in 2017

CC&G’s have the third highest rate out of all 11 councilsClaimant rates continue to be above the NI average (2.6

%) but less so than in 2009-2012Unemployment rates should not be regarded as an indication of the ‘real’ levels of unemployment but have to be seen alongside inactivity, etc.

Claimant Unemployment rate (% 16-64), Causeway Coast & Glens vs. NI, 2005-17Source: NISRA & Department of Finance, Economic and Labour Market StatisticsNote: 2013 introduction of universal creditUnemployment rates are falling but remain above NI averageSlide19

Causeway Coast & Glens claimant unemployment LGDs comparison

CC&G has the

third highest claimant unemployment rate at ward level of 10.1% in 2017*

Next highest ward in CC&G is #30 and 7 wards have a 5% rate or higherAverage claimants within CC&G (2.9%) remain above the NI average (2.6%)Lowest ward in CC&G is just outside the bottom ten wards with 1% rate

Variation in % of Claimant Unemployed as proportion of 16+, Council Areas, 2017Source: NISRA & Department of Finance, Economic and Labour Market Statistics* Highest ward: Greystone in LimavadyVariation across wards but most clustered at lower endSlide20

Causeway Coast & Glens:

Enterprise TrendsSlide21

Mid table performance for enterprise stocks in Northern Ireland

NI gain almost

3,700 extra businesses since 2015

Source:

IDBR, NISRA, NOMIS & UUEPC AnalysisNo. of VAT/PAYE Businesses per 10,000 people, UK Regions, 2016-17380 VAT/PAYE businesses per 10,000 people (2017) in NIUp from 360 in 2015 a gain of almost 3,700 businesses in the last 3 yearsTotal businesses grew by 2.3% from 2016Slide22

Enterprise births in NI

Evidence of l

ess entrepreneurial drive than the rest of the UK?

Source:

IDBR, NISRA, NOMIS & UUEPC AnalysisNo. of Businesses Births per 10,000 people, UK Regions, 2016-1737 businesses births per 10,000 people (2017) in NIUp from 29 per 10,000 people in 2015 a gain of just over 1,400 business births in the last 3 years1.4% average annual increase in business births since 2007Slide23

Enterprise deaths in NI lowest of all UK regions

Businesses show resilience and leadership

Source:

IDBR, NISRA, NOMIS & UUEPC Analysis

No. of Businesses Deaths per 10,000 people, UK Regions, 2016-1726 businesses deaths per 10,000 people (2017) in NIUp from 22 per 10,000 people in 2015 a loss of just over 800 business in the last 3 years10 year average see’s NI have the lowest business deaths per 10,000 people in all UK RegionsSlide24

Causeway Coast & Glens and

enterprise stock

250 business gain since 2015

Source:

IDBR, NISRA, NOMIS & UUEPC AnalysisNo. of VAT/PAYE Businesses per 10,000 people, NI LGD’s, 2015-17400 VAT/PAYE businesses per 10,000 people (2017) in CC&GUp from 390 per 10,000 in 2015 a gain of 250 businesses in the last 3 yearsTotal businesses grew by 1.9% from 2016Slide25

Causeway Coast & Glens and business births

425

new businesses created per year in the past three years

Source:

IDBR, NISRA, NOMIS & UUEPC AnalysisNo. Businesses Births per 10,000 people, NI LGD’s, 2016-1737 businesses births per 10,000 people (2017) in CC&GUp from 25 per 10,000 people in 2015 a gain of almost 1,300 business births in the last 3 years39% in business births since

2015

Rise up the ranks from 11

th

in 2015 to 5

th

in 2017Slide26

Causeway Coast & Glens and business deaths

A loss of

300 businesses per year since 2015

Source:

IDBR, NISRA, NOMIS & UUEPC AnalysisNo. of Businesses Deaths per 10,000 people, NI LGD’s, 2016-1723 businesses deaths per 10,000 people (2017) in CC&GUp from 19 per 10,000 people in 2015 a loss of 890 business in the last 3 yearsThe

trend

of increasing numbers of business deaths seems

universal across all

LGD’s

CC&G is 10

th

ranked LGD, staying the same as in 2015Slide27

Causeway Coast & Glens and business churn

Turnover in business stock just above NI average

Source:

IDBR, NISRA, NOMIS & UUEPC Analysis

Business Churn Rate (%), NI LGD’s, 2016-17CC&G 17.3% business churn in 2017 Up from 13.1% in 2016 a 4.2% points riseSlide28

Causeway Coast & Glens:

Economic OutlookSlide29

A growing population

Total population is forecast to reach around 147,000 by 2027

Total Population is forecast to increase from 144,000 (2017) to 147,000 (2027) – a 2.2% growth

This increase is likely to have impact on variety of policies such as;

Housing demandDemand for services (esp health)Impact on rates The UUEPC assume that employment creation impacts upon both population & working population through migration trends (i.e. employment loss can cause out-migration of WPOP due to a lack of opportunities)Total resident population, Causeway Coast & Glens, 2001-27Source: NISRA & UUEPC Autumn 2018 Local ModelSlide30

CC&G to have a steadily falling working age population

Is the ageing population having an impact?

Working age population is forecast to fall from 90,000 (2017) to 87,000 (2027) – a 2.9% decrease

Due to higher proportions of older age bands in the Council area?

Resident working age population, Causeway Coast & Glens, 2001-27Source: NISRA & UUEPC Autumn 2018 Local ModelSlide31

Dependency ratio on the up?

Due to a more aging population

The dependency ratio is forecast to increase from 38% (2017) to 41% (2027)

Likely to have significant policy implications, such as;

Pressures on healthcare / local servicesShrinking labour force participationImpact on domestic ratesSkills matching issues i.e. not matching employer needsResident dependency ratio (%), Causeway Coast & Glens, 2001-27Source: NISRA & UUEPC Autumn 2018 Local ModelSlide32

Output to increase at a steady rate over the next decade

But still below peak and not expected to return to peak until 2027

Real GVA is forecast to increase from £2bn (2016) to £2.2bn (2027)

As a result of the increase of in productivity from such sectors as ICT and gains in other more traditional sectorsUpper scenario forecast real GVA is to be £2.3bn by 2027

Lower scenario forecast real GVA is to be £2.1bn by 2027Real GVA (£bn), Causeway Coast & Glens, 2001-27Source: ONS (Regional Accounts) & UUEPC Autumn 2018 Local ModelSlide33

Output growth to be driven by higher productivity jobs

With ICT & Professional Services leading the way

Real GVA growth is forecast to be 0.6% per annum between 2017-27

Lower & upper scenarios forecast growth of 0.2% to 1.1% per annumHigh value adding sectors are forecast to drive growth such as Information & Communications and Professional & Scientific services

Real GVA CAGR (%), Causeway Coast & Glens, 2017-27Source: ONS (Regional Accounts) & UUEPC Autumn 2018 Local ModelSlide34

Growth to be relatively modest over the next decade

With the transition period (2020-21) to be particularly slow

CC&G real GVA growth rate for 2016 was -1.1%

Forecasted average growth rates of 0.6% (2017-27)

Real GVA growth rate (%), Causeway Coast & Glens, 2002-27Source: ONS (Regional Accounts) & UUEPC Autumn 2018 Local ModelSlide35

Total resident labour force

To steadily increase over the next decade

Labour force comprises of the economically active (i.e. employed plus unemployed)

Resident labour force is forecast to increase from 58,700 (2017) to 58,800 (2027) – a 0.2% increaseThe UUEPC assume a proportion of employment in the area is taken by commuters (1/6th

) and the remaining is taken by residents (4/6th)Total resident labour force, Causeway Coast & Glens, 2009-27Source: LFS (Local Area Database) & UUEPC Autumn 2018 Local ModelSlide36

Employment below peak

And forecast to remain below peak for next decade

Total employment is forecast to be 53,000 in 2027, up from 52,000 in 2017 – a 1.3% increase

Upper scenario forecasts total employment to be 55,000 by 2027Lower scenario forecasts total employment to be 51,000 by 2027 (ie

: losses in 2019-2021 not made up)Total workplace based employment, Causeway Coast & Glens, 2001-27Source: NISRA & UUEPC Autumn 2018 Local ModelSlide37

Sectoral employment change

Accommodation & Construction leading the way

CC&G is forecasted to gain around an additional 700 jobs by 2027

The accommodation & construction sectors are forecast to gain around 700 additional jobs by 2027Agriculture is forecast to lose almost 600 jobs by 2027 – structural change continuing

Change in employment, Causeway Coast & Glens, 2017-27Source: NISRA & UUEPC Autumn 2018 Local ModelSlide38

Employment growth to range from 1,200 job losses to a 2,800 job gain

Employment is forecast to grow in 2 out of the 3 scenarios with growth ranging from 700 to 2,800 new jobs by 2027

Employment is forecast to fall by 1,200 jobs in the lower scenario by 2027Tourism sector to act as the key driver in the Council area (as in previous two periods)

Total workplace based employment (net change), Causeway Coast & Glens, 2017-27

Source: NISRA & UUEPC Autumn 2018 Local ModelSlide39

Job growth

Baseline, Lower & Upper Scenarios

Source:

NISRA & UUEPC Autumn 2018 Local ModelSlide40

Resident employment rate (%)

The employment rate is forecast to increase slightly over the next decade

CC&G employment rates are forecast to fall slightly from 61% (2017) to 64% (2027)

It should also be noted that levels of working age migration will impact the employment rate – in a positive fashion

Resident employment rate (%), Causeway Coast & Glens, 2009-27Source: LFS (Local Area Database) & UUEPC Autumn 2018 Local ModelSlide41

Resident ILO unemployment level

Unemployment levels are forecast to fall over the next decade

Unemployment levels are forecast to decrease from 4,300 (2017) to 3,200 (2027)

Sharp falls in 2017 and 2018 with only a slight upward curve thereafter but well below the 2016 numbers

Resident ILO unemployment level, Causeway Coast & Glens, 2009-27Source: LFS (Local Area Database) & UUEPC Autumn 2018 Local ModelSlide42

Resident ILO unemployment rate (%)

Unemployment rates to fall and then remain stable over the next decade

Unemployment rates show the no. of unemployed as a % of the

labour forceUnemployment rates are forecast to fall from 7.4% (2017) to 5.4% (2027)

Resident ILO unemployment rate (%), Causeway Coast & Glens, 2009-27Source: LFS (Local Area Database) & UUEPC Autumn 2018 Local ModelSlide43

Resident economic inactivity level

Inactivity level is expected fall slightly to over the next decade

Numbers in Economic Inactivity is forecast to fall from 31,000 (2017) to 28,000 (2027) – a 8.7% decrease

Expected to decrease as the tightness of the labour market and the falling numbers of working age population

Resident economic inactivity level, Causeway Coast & Glens, 2009-27Source: LFS (Local Area Database) & UUEPC Autumn 2018 Local ModelSlide44

With the economic inactivity rate also forecast to fall

Economic inactivity rate shows the no. of the economically inactive as a % of the working age population

The economic inactivity rate is forecast to fall from 34.4% (2017) to 32.3% (2027)It should also be noted that working age migration will impact the inactivity rate

Resident economic inactivity rate (%), Causeway Coast & Glens, 2009-27

Source: LFS (Local Area Database) & UUEPC Autumn 2018 Local ModelSlide45

SummarySlide46

Forecast summary

Forecast summary table, Causeway Coast & Glens, 2017-27

Source:

NISRA,

NISRA (BRES), LFS (Local Area Database), ONS (Regional Accounts) & UUEPC Local Model Forecasts Autumn 2018Note: Resident employment / unemployment / inactivity rate (%) change refer to % point change 20172027% Change or % point changeDirection of ChangeGVA£2.0

£2.2

9.4%

↑

Total Employment

52,000

53,000

1.9%

↑

Total Population

144,000

147,000

2.1%

↑

Working Age Population

89,000

87,000

-2.2%

↓

Resident Employment Rate (%)

60.7%

64.0%

3.3%

↑

Resident Unemployment Rate (%)

7.4%

5.4%

-2.0%

↓

Resident Economic Inactivity Rate (%)

34.4%

32.3%

-2.1%

↓Slide47

NI strengths & challenges:

Source:

NISRA,

NISRA (BRES), LFS (Local Area Database), ONS (Regional Accounts) & ONS (Well-being)Slide48

Local council strengths & challenges:

Source:

NISRA,

NISRA (BRES), LFS (Local Area Database), ONS (Regional Accounts) & ONS (Well-being)Slide49

Local council summary:

Source:

NISRA,

NISRA (BRES), LFS (Local Area Database), ONS (Regional Accounts) & ONS (Well-being)Slide50

AppendixSlide51

Forecasts and their construction

UUEPC Suite of Economic Forecast ModelsSlide52

Use of Forecasts

Forecasts are useful to help councils guide any future potential policy direction / decisions, in areas such as;

Planning;

Economic development; and

Public facilities management.But forecasts are conditional on a range of underlying factors, in particular;Historical / Past trends;The policy environment; andThe current economic environment (Locally, Nationally & Globally).These underlying factors are major determinants of future performance as they reflect the relative competitiveness of an area / sector in the present and into the futureThe UUEPC’s local forecasts presented in this slide deck are calculated using a top-down approach – i.e. UK forecasts allocated to the UK Regions (i.e. NI) & these NI forecasts are then allocated to each of the 11 council areasThe forecasts presented do not consider local initiatives or strategies that have yet to be approved (i.e. current policy framework remains unchanged)Slide53

The UUEPC have developed 3 scenarios for NI and each of the 11 councils given the current uncertainty in the economic environment (i.e. Brexit, etc.)

These scenarios thus provide a range of potentially varying economic impacts the changing economic environment might have on the NI & council economies

The Scenarios

Baseline –

The baseline scenario provides an illustration of the UUEPC’s most likely outcome, and is based on the UK & EU reaching a mutually beneficial trading arrangement Upper – The upper scenario provides an illustration of the NI’s employment rate moving from the current rate of 69% to the ambitious target of 73% by 2027Lower – The lower scenario provides an illustration of a more significant negative impact from ‘Brexit’ through severely impacted trade as well as reduction in consumer spending as a result of a fall in consumer confidenceIt should be noted, however that both the upper & lower scenarios are considered to be low probability eventsScenariosUpper, Central and Lower ScenariosSlide54

The UUEPC Local Government Forecast Model is a demand led model.

I

n which the main driver are its employment forecasts.

M

eaning the employment forecasts provide the basis for all subsequent forecasts produced by the Local Government Model.These employment forecasts whether they be, gains or losses, influence;Level of GVA produced – wages and profits generated (due to losses or gains in employee wages & firm revenues)Level of population / working age population – through in / out-migration (based on the assumption that job creation or loss are the main drivers for in / out-migration into / out of a council area)Level of unemployment, inactivity & resident employment– through the assumption job gains or losses will have a positive (reducing both & increasing employment) or negative (increasing both & decreasing employment) effect However, due to the commuting matrix the full impact of employment changes, upon each assumption, are not entirely felt by the council As the model accounts for commuting in and out of each council. Meaning, the full extent of employment changes are not only impacting residents within the involving council, but are in fact distributed throughout all 11 councils. Local Model Development

AssumptionsSlide55

GlossarySlide56

Workplace based Employment

-The number of people employed by location of work

Resident based Employment

-The number of people employed by location of residency

Real GVA The measure of the value of goods and services produced in an area, industry or sector of an economy. Real value is the nominal value adjusted for inflation and is obtained by removing the effect if price level changes from the nominal value of time-series dataProductivity Measures how efficiently production inputs are being used in an economy to produce a given level of output. Productivity within the UUEPC Model is derived from total GVA divided by the number of people employed Economic Inactivity Rate (%) The rate of those within the working age population who are not in employment, nor actively seeking employment from one year to the next. Glossary of Key TermsSlide57

CAGR (%)

The compound annual growth rate (CAGR) is the mean annual growth rate of an over a specified period of time longer than one year.

Labour Force

Those people who are at the working age (16-64), and are able and willing to work.

Working Age Population Those aged between 16 and 64ILO Unemployment Rate (%) - The rate of those who are: out of work, want a job, have actively sought work in the previous four weeks and are available to start work within the next fortnight changes from one year to the nextGlossary of Key TermsSlide58

Thank YouSlide59

Contact details

Dr.

Eoin MagennisSenior Economist: Ulster University Economic Policy CentreEmail: e.magennis@ulster.ac.ukTelephone: 02890 366 219

Andrew ParkEconomist: Ulster University Economic Policy Centre

Email: a.park@ulster.ac.ukTelephone: 02890 368 917