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Brexit impact and household income squeeze slows NI's economic growth

By John Mulgrew and PA

Economic growth in Northern Ireland is slowing along with the UK as a whole amid a squeeze on household incomes and the fallout from the vote for Brexit, it has been claimed.

The UK economy grew by just 0.3% in the second quarter as household spending slumped to its lowest level in nearly three years following a slowdown in new car sales and persistent pressure from higher inflation.

The Office for National Statistics (ONS) said the amount of money spent by households grew by 0.1% in the second quarter, down from 0.4% for the first three months of the year.

"We are seeing the impact of the squeeze in real living standards given inflation rates are higher than annual wage and salary growth", Dr Esmond Birnie of Ulster University's Economic Policy Centre said.

"There has been little or no growth in business investment. While some might attribute part of the slowdown to the delayed shock from last summer's Brexit decision, it is important to note that UK GDP growth has been decelerating since 2014.

"Northern Ireland is probably tracking the UK trend - growth here is also slowing down."

The rate, its lowest since the final three months of 2014, was driven by a sharp drop in transport spending, which fell by 2.2% between April and June after growing by 1.4% in the first quarter.

It coincides with data from the Society of Motor Manufacturers and Traders which reported that new car sales had accelerated at the start of the year, before tailing off in the second quarter.

Consumer spending has also been impacted by soaring inflation in response to the Brexit-hit pound, although the cost of living stalled at 2.6% in July.

It comes as the ONS said gross domestic product (GDP) expanded by 0.3% in its second estimate of growth for April to June.

It means the UK is likely to have recorded the slowest second quarter growth out of the G7 nations.

Darren Morgan, the ONS' head of GDP, said: "GDP growth has slowed markedly in the first half of the year with relatively robust services growth, partly thanks to a booming film industry, offset by weak performances from manufacturing and construction in the second quarter (April to June 2017).

"Household spending grew weakly, with the lower-value pound hitting household budgets."

Business investment, which includes money spent by firms on commercial property and machinery, was flat in the second quarter at £43.8bn.

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