Belfast Telegraph

Recovery 'slow and fragile' as output still 12% below the boom

New index shows Northern Ireland lagging behind other parts of UK

By Margaret Canning

Northern Ireland is still bearing the scars of economic downturn with its recovery "fragile and slow," a firm of business advisers has said.

According to unemployment data, the claimant count fell by another 900 people during June, and the unemployment rate also fell by 1.1% over the year to 6.7%.

But PwC said the separate Northern Ireland Composite Economic Index, also published yesterday, suggested output was still 12.7% below the boom-time of early 2007.

According to Dr Esmond Birnie, chief economist of PwC, the index suggests output has increased only 2.1% since its nadir in the second quarter of 2009 – and was even down slightly on the first quarter of the year.

But on a more optimistic note, the index had increased by 1.6% over the year, reflecting growth in the services and production sectors.

Dr Birnie said: "The provisional composite economic index data confirm our own estimates that Northern Ireland is recovering much more slowly than other UK regions and that the recovery has a considerable way to go."

He said: "The impact of the property collapse has inhibited domestic spending, public sector spending cuts have inhibited investment and the proportionally smaller private sector cannot either invest or export enough to close the gap.

"It's also worth noting that, while claimant count unemployment has fallen by 8,800 over the past year, economic inactivity has risen by 6,000 in the past three months and remains the highest amongst the 12 UK regions."

Average earnings growth had also slowed down to just 0.3% in the three months to May. "The underlying trend is for a recovery that sustains and even creates jobs but many of these deliver low pay and equally low productivity.

"This needs to change over the next couple of years if the economic upturn is to be sustainable in the longer run."

Recent jobs boosts were welcome but would take some years to translate into "profitable jobs in offices and factories". Joblessness is still disproportionately affecting young people, according to yesterday's labour force survey for March to May.

It estimates that there was an 0.8% increase in the unemployment rate among 18 to 24-year-olds to 20.4% over the year.

Ulster Bank economist Richard Ramsey said young people were behind left behind in the recovery.

"Overall, the number of people joining the unemployment register is falling, but over two-thirds of those that did join the register in June were under 35 years of age.

"So, as far as recovery is concerned, some age groups, notably young people, are still waiting for it to happen," he said.

There was a fall in the numbers of long-term unemployed, with 48.5% of the jobless claiming dole for more than a year – down nearly 10% on a year earlier.

Enterprise Minister Arlene Foster welcomed the fall in the unemployment rate and claimant count – and the growth of 1.6% in the composite economic index.

"The annual growth in economic output is encouraging and it is important that we continue to build on recent progress by support in research and development, expanding existing markets and promoting inward investment."

Belfast Telegraph