An extra 8,000 people may be out of work in Ulster by the middle of next year, a report warned today.
The economy should avoid a recession but growth will slow to 0.5 per cent, added the Oxford Economics dossier, prepared for Economy Minister Arlene Foster's Department of Enterprise, Trade and Investment.
Reduced industrial demand, the end of large public sector construction projects and a public services spending increase reduced in real terms by inflation close to zero are all factors.
The paper said: “Our estimate is unemployment may be 8,000 higher by mid-2009. The risks are clearly on the downside but at the time of writing [September] the economy should avoid a recession.
“Even so, a substantial rise in unemployment can’t be avoided.”
The number of people claiming unemployment-related benefits in August stood at 27,600. This was an increase of 800 from the previous month and a rise of 4,200 over the year.
Ms Foster has warned against the danger of people talking themselves into a recession amidst global financial turbulence. She admitted inflation and falling consumer confidence posed a threat, however.
The Oxford Economics research - Challenging Times, Autumn 2008 Forecastswarned that the golden age was over.
It said there had been a long period of strong labour market growth, more migration and escalating personal wealth but that improvement in wages towards the UK average appeared unlikely.
Low salaries are attracting investors and a shift to higher wage companies appears difficult in the current global climate, at least in the short term, it added.
Ms Foster has warned Northern Ireland faces the lowest levels of growth since the early 1980s but appealed for cool heads.
PA