Belfast Telegraph

Northern Ireland growth to remain slower than rest of the UK, warns PwC

By Margaret Canning and PA

Northern Ireland's economic progress is likely to continue to lag behind the UK, where output is now well above pre-crash peak, an economist has said.

GDP figures from the Office for National Statistics (ONS) showed the UK economy grew by 2.2% last year, down from 2.9% in the previous 12 months.

Expansion in the fourth quarter of the year picked up to 0.5% - up from 0.4% in the third quarter and following a rate of 0.5% in the second quarter.

The economy has slowed since last summer, and this month Chancellor George Osborne said the UK faced a "dangerous cocktail of new threats" including falling commodity prices, recessions in Brazil and Russia and rising tensions in the Middle East.

Dr Esmond Birnie, PwC chief economist in Northern Ireland, said the figures underlined that the region would still lag behind the UK as a whole, notwithstanding the pressures on the larger economy.

The services sector - everything from restaurants to estate agents - was continuing to power the UK recovery, growing 0.7% in the last quarter, the ONS data showed.

But production sectors, including manufacturing and oil, were down.

Dr Birnie said: "The data implies that by the end of last year, the UK economy had grown 6.6% above the peak it achieved before the 2008 banking crisis and recession.

"This is in marked contrast to the performance of the Northern Ireland economy, where the most recent figures (for the third quarter of 2015) indicate that output remains 8.3% below the previous peak of the second quarter of 2007. PwC forecasts that UK growth will be 2.2% in 2016 - the same rate as last year - before rising slightly to 2.3% in 2017.

"However, Northern Ireland is likely to continue in its position, underperforming the other UK regions with growth rates of around 1.4% in 2016 and 1.5% next year."

He added that while the data showed the economic recovery was continuing, it was nonetheless slowing down.

But in a tweet on the latest GDP figures, Chancellor George Osborne said the data showed that the country "continues to grow steadily, and despite turbulence in the global economy we're pushing ahead". Mr Osborne added: "With the risks we see elsewhere in the world, there may be bumpy times ahead, so here in the UK we must stick to the plan -that's cutting the deficit, attracting business investment and creating jobs."

And Prime Minister David Cameron said: "It's good news that the economy is growing steadily, meaning more jobs and security for people."

However, in November the Bank of England downgraded its growth outlook for the country to around 2.7% during 2015 - down from 2.8% - but the official data has fallen short of these expectations.

The latest independent forecasts from spending watchdog, the Office for Budget Responsibility - also in November - maintained UK growth in 2015 at a rate of 2.4%, which these official figures also missed.

UK growth in 2015 was the lowest since 2013, with the slowing global economy a major factor.

Belfast Telegraph