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Northern Ireland economy grows by 1.4% - but recovery 'running out of steam'

By John Mulgrew

Published 15/04/2016

Ulster Bank chief economist Richard Ramsey
Ulster Bank chief economist Richard Ramsey

Northern Ireland's economy grew by 1.4% last year - double the growth here a year earlier - but experts have warned the recovery is "running out of steam".

While the economy enjoyed growth, Northern Ireland still lags behind the UK as a whole, which expanded by 2.3% during the same period.

Economic output in Northern Ireland grew by 0.4% in the fourth quarter of 2015, according to the latest economic update from the Northern Ireland Statistics and Research Agency (NISRA).

But the headline growth "conceals contrasting fortunes" between Northern Ireland's public, and private sectors, according to Ulster Bank's chief economist Richard Ramsey.

"With the public sector reducing its headcount it is acting as a drag on economic growth," he said.

"The private sector's growth rate of 0.7% quarter-on-quarter, and 2.3% year-on-year for 2015 as a whole are more encouraging."

The public sector jobs index from NISRA showed employment numbers fell by 0.5% over the last quarter in 2015. It says that was impacted by the civil service voluntary exit scheme.

Mr Ramsey said despite the recovery, the private sector has only recouped "37% of the output it has lost during the recession".

"If it were assumed that the quarter four 2015 growth rate was to continue going forward, private sector output would not return to its pre-downturn peak until quarter one in 2019," he said.

"This is what could be referred to as a lost decade."

Northern Ireland's economic growth in the last three months of 2015 was largely driven by the services sector, which increased by 0.6%.

That was dominated by manufacturing growth, according to PwC economist Esmond Birnie.

But the construction industry suffered a slump of 1.8%.

"By the end of 2015, the total output of the Northern Ireland economy was still 7.8% lower than its peak value in mid-2007, just before the onset of the banking crisis and the 2008-9 recession," Dr Birnie said.

"In contrast, by the end of 2015 UK GDP had recovered to 7% above its pre-recession peak. In other words, not only is recovery in the Northern Ireland economy relatively slow but it is still both incomplete and mixed."

And he said, given the latest figures, there is evidence that the "Northern Ireland recovery is running out of steam".

"Output remains well behind pre-recession levels, the most recent unemployment claimant count showed an increase in the jobless total and this week's Office for National Statistics (ONS) figures showed that house price growth in Northern Ireland was much lower than that in England."

Speaking about political party manifesto pledges, Dr Birnie said "commitments to increase spending on new policies will face a challenging environment of continued austerity".

"Hard choices around cuts, increasing local taxation, leveraging public sector assets and reforming government seem unavoidable."

Belfast Telegraph

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