4,000 furloughed staff in Derry and Strabane may not return and economy could shrink by 9.5%, says economist

This was the potential scenario laid out by Ulster University economist Dr. Eoin Magennis at a meeting of the Derry & Strabane Strategic Growth Partnership yesterday.

Dr. Magennis said 4,000 people may have lost their jobs by the time the furlough scheme is wound down in the autumn.

The local economy is expected to shrink by 9.5% this year in the biggest single year contraction Derry will have ever seen - worse than the 2008/9 crash. Dr. Magennis predicted between 13,000 and 14,000 people will have been furloughed by October/November with this rising to 15,900 when lay-offs are included. “There are some estimates that as many as 25% of people may not return to work after the furlough scheme comes to an end. If that was the case you could be looking at an additional 4,000 entering unemployment or economic inactivity in the area so significantly big numbers here,” he said.

Between March and May a huge spike in unemployment has already been recorded.

“Derry City and Strabane began the crisis just shy of 6% unemployment in March. That’s increased by a further 60% in April to May [up to 9.6%] so a significant rise right across the council area,” said Dr. Magennis.

The local economy is expected to contract significantly and every household and firm will feel it.

“Gross Value Added in Derry City & Strabane is expected to fall by 9.5 % in 2020 - an enormous loss to the local economy,” the SGP was told. “There could be around 16,000 people either laid off or furloughed at the peak of the crisis. We kind of expect the labour market impacts to peak perhaps around October/November time as the furlough scheme tapers out and businesses make the decision as to whether they bring staff back or not.”