Belfast Telegraph

'Disappointing growth' has region lagging behind rest of UK

By Clare Weir

The economy remains "precariously balanced", according to a Northern Ireland financial expert.

PriceWaterhouseCooper chief economist for the region, Esmond Birnie, has said that the preliminary GDP figures will fuel the campaign for business and tax incentives to create better opportunities for growth.

"The latest, 2011 Quarter 1, UK GDP figures are disappointing, with growth since the start of 2011 only making up the ground lost in the last quarter of 2010," he said.

"We are not in double dip recession territory, but we should not be complacent, and from a Northern Ireland point of view the situation is especially worrying.

"The indicators suggest that even given the UK's lacklustre figures we are still lagging behind other regions, with the north's growth likely to have been a mere 0.8% last year.

"We anticipated that Northern Ireland will grow by 1% this year - well behind our forecast of very modest overall UK growth of around 1.4% in 2011.

"Policy makers need to reflect on the truth that more of the same will simply lead to more of the same, in terms of poor outcomes.

"The ongoing consultation about an Enterprise Zone and business and tax incentives may provide real opportunities for growth that don't otherwise exist."

However, Wilfred Mitchell, Federation of Small Businesses policy chair, said that overall, the figures were good news after a depressing end to 2010.

"These figures, coupled with the fall in inflation, should give the Bank of England the confidence to keep interest rates low," he said.

"The government should not become complacent and must look at ways to keep the momentum going.

"The latest FSB 'Voice of Small Business' Index showed that business confidence increased in the first three months of the year, so the government must look at ways to further boost confidence, nurture entrepreneurship and allow small firms to grow.

The figures comes as the country starts to feel the bite of Chancellor George Osborne's fiscal squeeze.

Elsewhere, the US, and European peers such as Germany, are experiencing much healthier growth.

Mr Osborne, who insisted the "economy was on the right track", is rolling out an £81bn package of spending cuts, which includes hundreds of thousands of public sector job losses, and the VAT hike to 20% from 17.5%.

The government has pinned its hopes on the private sector picking up the slack in the economy - but the figures show certain sectors continued to struggle in the first three months of the year.