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UK's sunny outlook is not reflected in Northern Ireland, says Esmond Birnie

By Margaret Canning and PA

Published 29/07/2015

Danske Bank chief economist Angela McGowan said it estimated that the Northern Ireland economy had enjoyed a similar pace of growth to the UK at around 0.7%
Danske Bank chief economist Angela McGowan said it estimated that the Northern Ireland economy had enjoyed a similar pace of growth to the UK at around 0.7%

Northern Ireland's economic outlook is as disappointing as the weather - despite a bounce in UK GDP growth, it's been claimed.

According to the Office for National Statistics, UK growth bounced back in the second quarter of 2015 as gross domestic product (GDP) increased by 0.7%.

But PwC chief economist Esmond Birnie said Northern Ireland was not basking in the same economic glow as the UK.

"In Northern Ireland the outlook is like the weather - rather grey and overcast and chilly.

"Business confidence measures have been weak and volatile over the last seven months, while June saw the first increase in unemployment for over two years."

The latest UK-wide growth means GDP per head - a measure which takes into account that the nation's wealth is shared by an expanding population - has now caught up with pre-crisis levels at the start of 2008.

Confirmation that growth is now back on track could add to speculation about the timing of an interest rate being brought forward after six years of a 0.5% interest rate.

A return to form for the dominant services sector, which has led the economy out of recession, helped the UK improve on a disappointing start to the year, when GDP increased by just 0.4%.

Dr Birnie said last week's Northern Ireland economic composite index had indicated that growth was around half of the UK average.

The index showed there had been 1.6% growth in the economy in the 12 months to the end of March 2015.

That compared with a more robust growth rate of 3% in the UK - although growth in the first three months of 2015 appeared to be stronger here than the UK.

On a sectoral level, there was growth of nearly 8% in construction, 3.6% in production and 1.7% in services.

Dr Birnie said UK growth would also have ramifications for all. "It is also worth remembering that continued relatively strong growth at the UK level makes it more likely that the Bank of England will begin to raise interest rates again, starting around the end of this year or early in 2016.

"Overall therefore, a solid UK performance, but Northern Ireland has a very long way to go to close the gap."

But Danske Bank chief economist Angela McGowan said it estimated that the Northern Ireland economy had enjoyed a similar pace of growth to the UK at around 0.7%.

And in the UK as a whole, the services sector was accounting for most growth - making growth "lop-sided," she said. Agriculture was proving to be a drag on performance, shrinking by 0.7% during the second quarter.

Ms McGowan said: "Low global commodity prices and the strong pound have been putting sustained pressure on this industry since the start of the year and dairy farmers in particular are struggling with low milk prices.

"Although agriculture is a relatively small sector which makes up roughly 0.6% of UK GDP, it nonetheless has an important place in the UK's economy and holds great potential.

"This is clearly a time when some policy interventions are needed to support this sector."

Belfast Telegraph

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