Economy 'may finally have hit recovery mode'
But revival here is set to be just 0.5%
A long, slow road to recovery beckons for Northern Ireland as figures indicate the UK inching its way towards economic health, it has been claimed.
The Office of National Statistics' GDP figures showed a second successive quarter of growth at 0.6% for April to June – leading Chancellor George Osborne to remark that the economy is "on the mend".
The spurt of growth was double that of the first quarter of the year – and importantly, the four main sectors of construction, manufacturing, services and agriculture all shared in the expansion, with services accounting for the lion's share.
It was also the first time since 2011 that the UK has experienced two quarters of growth back-to-back and marks the UK recouping half of the growth it lost in the recession.
The improving UK picture will influence the province's economic mood although the economy here is tipped to grow by just 0.5% this year.
Nigel Smyth, CBI Northern Ireland director, said: "The pick-up in the UK economy is encouraging and reflects the CBI view that at a national level the recovery is under way and gaining momentum. With Great Britain a major market for our services and manufacturers, this is good news for Northern Ireland."
However, "the headwinds we face remain strong and the road ahead is likely to remain bumpy".
Separate GVA figures for 2011, also published yesterday, estimate the income generated by businesses, less the cost of goods and services to create the income, at £18.2m in Northern Ireland. That was up 0.5% on 2010, although the figure for the UK at £977.4m was up 5.8% on 2010.
Ulster Bank chief economist Richard Ramsey said the recuperation apparent in the latest GDP figures was welcome, with the state of the UK "the most important driver" of economic activity in Northern Ireland.
But he cautioned: "A meaningful UK economic recovery does not hinge on one set of figures, but instead requires successive quarters of growth."
To recoup all the growth lost in the economy, it would need to grow by 0.6% in each of the next six quarters. "This highlights the long, slow road to recovery that the UK economy, and by implication Northern Ireland, faces. But the figures highlight a step in the right direction." Danske Bank chief economist Angela McGowan said two quarters of increase in GDP "bodes well" for recovery.
"The fact that the rate of growth has accelerated in quarter two is also a good sign and reflects a much stronger performance in the services sector and probably also a little bit of a catch-up from quarter one, when bad weather held down construction activity and household spending."
Vicky Redwood, of Capital Economics, said that UK-wide, real pay was falling, bank lending was flat and more public sector austerity measures were being put in place so that growth could slow down over the rest of the year.