Northern Ireland being left behind as post-crisis recovery quickens

The gap between Northern Ireland's economy and the UK as a whole has become a "gulf", an economist has said as figures show stronger growth than expected in Britain's economy.

Britain's economy grew more quickly than previously thought in the second quarter of this year though the start of 2014 was more sluggish, according to revised official figures.

They showed that gross domestic product (GDP) expanded by 0.9% from April to June, compared to a previous estimate of 0.8%.

However, the Office for National Statistics (ONS) data also calculated that first quarter growth was 0.7%, down from 0.8%.

It came as the ONS also revealed that the UK economic downturn ended around nine months earlier than first thought.

Dr Esmond Birnie, PwC chief economist in Northern Ireland, said services were continuing to dominate the UK economy, with communications, technology and business services also thriving.

"Overall, the new data suggests that, between early 2008 and mid-2012, UK GDP followed a similar path to the eurozone, but since then, UK recovery has been faster and stronger than previously thought, with growth in Q2 2014 revised up 0.1% to 0.9%.

"The UK economy has now passed its pre-crisis peak and is well into real growth territory, with Q2 2014 GDP 2.7% ahead of the UK's pre-recession peak."

But he added: "With available measures for local growth implying that total output in Northern Ireland remains as much as 12% below its pre-crisis level, the figures cast an unfavourable light on the extent of recovery here.

"If the data is reliable, the gap between the region and the UK average is no longer a gap – it has become a real gulf."

Methodological changes and data revisions meant GDP reached its pre-recession peak in the third quarter of 2013 rather than in the second quarter of this year. It means the UK economy is now 2.7% larger than in the first quarter of 2008, the last period before the recession took hold.

The changes also mean that the economy is £27.8bn, or 6.6%, larger than had been earlier estimated, in current prices.

The latest revisions showed the economy was boosted by a much better performance from the construction sector in the second quarter than previously thought as well as a small improvement in the dominant services sector, which represents three-quarters of output.

Growth in the first quarter was revised down partly because household expenditure was lower than had been thought.

The new figures come after changes in methodology to include spending on research and development as well as illegal activities such as drugs and prostitution, in addition to the usual periodic revisions of ONS data.

It revealed earlier this month that the recession of 2008/9 had not been as deep as previously thought, with a "peak-to-trough" contraction of 6%, rather than 7.2% as previously thought.

The subsequent recovery up to 2012 has also been quicker. Yesterday's figures showed that GDP in 2013 grew by 1.7%, the same as previously thought.

Belfast Telegraph