Northern Ireland's economy will emerge from recession in the next 12 months.

But, a new report has also warned of a grim outlook for the beleaguered construction sector as the housing market on both sides of the border continues to fall, with all-island house values not forecast to reach peak values until beyond 2020.

These are among the latest such predictions to emerge from accountancy firm Ernst & Young and is contained in a report that covers both of the Irish economies.

Published on Wednesday, it comes just days after the Bank of England's Monetary Policy Committee again voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%.

However, the report also warned that the Stormont Executive must take "decisive action" for growth to continue, even though the economic situation in NI is continuing to do better than in the Irish Republic, in part due to a strong manufacturing sector.

Ernst and Young's upbeat message is just the latest such attempt at an economic fillip, as in January, it insisted that the UK - including NI - was "now finally out of recession".

"We continue to anticipate GDP growth of 1% in 2010," said Hetal Mehta, Senior Economic Advisor at Ernst & Young, commenting at the time.

Now, 11 months later, Graeme Harrison, Senior Advisor to Ernst & Young's Economic Eye, has again predicted an end to recession.

He did add a caveat however, and has told BBC NI that political leaders must act quickly if they want to transform the economy.

"I think it will be very difficult for the Assembly to agree cross-party on the cuts, especially with an eye on the forthcoming elections.

"The Comprehensive Spending Review budget given to Northern Ireland was not too bad a deal, so if they choose to they (Executive) can avoid cuts in the short term," he said.

According to the all-island economic forecast, Economic Eye, NI unemployment is to remain above 6% indefinitely and in the Republic it is to remain above 10% until at least 2018, but the report confirmed that the rate at which jobs are being lost has eased.

This is particularly the case in the Republic of Ireland (ROI) where the sharp initial falls in construction have slowed.

But, it also said: "House prices will continue to contract in both NI and ROI for the remainder of this year, in contrast to the UK where modest rises were enjoyed before prices started to fall back slightly in a double dip pattern."

In NI, the forecast is for unemployment to remain above 6% indefinitely given its greater reliance on the shrinking public sector for employment.

The report forecasts a reduction in public administration employment for NI of around 6,000 (11%) between 2010 and 2015.

In ROI, the forecast is for a similar contraction in public administration of around 10% between 2010 and 2015.

However, given the January 2010 Ernst & Young statement that "the UK is now finally out of recession" this new document again hailing its end did note that any economic growth in NI is "expected to lag behind the wider UK", which is projected to perform well due to strong service sector growth.

Another report, the Summer 2010 Ernst & Young Economic Eye forecast also suggested the island of Ireland would come out of recession in the early part of 2010 which the new version now suggests will be as much as a year later.

(BMcC/KMcA)