Belfast Telegraph

Sluggish growth leaves economy lagging behind rest of UK

By John Mulgrew

Northern Ireland's economy is continuing to lag behind the fortunes of Great Britain as one business barometer shows activity has dropped by 0.7%.

Economic activity fell between the second and third quarter of 2014, according to the latest Northern Ireland Composite Economic Index (NICEI).

But annual output increased by 1.1%, based on the previous year.

Economist John Simpson said a lack of private sector growth was "worrying" and an indication "Northern Ireland's economy is not recovering as quickly as it is in Great Britain".

"It leaves us with all sorts of questions about why Northern Ireland isn't do as well," he said.

The overall drop in activity was driven by a declining services sector, with retail trade and food being hit hardest over the period.

And it comes amid renewed calls in the Assembly yesterday for a cut in tourism VAT rates in order to help pubs and restaurants here compete with those in the Republic, where VAT for tourism-related businesses is 9.%.

"Many from the sector have been calling for this change to happen because of the obvious successes that we have seen in the adoption of similar measures in the Republic of Ireland where 6,000 jobs have been created," Alliance MLA Judith Cochrane said.

"As it stands, Northern Ireland is at a huge disadvantage because our rate remains high in comparison to across the border.

It's something that Pubs of Ulster has claimed could create more than 3,000 jobs for the tourism industry here.

Meanwhile, those areas witnessing a boost over the same period included business services and finance - which includes banking - along with transport and communications.

"But the overall picture leaves us lagging behind Great Britain. George Osborne talks about the UK being the fastest growing economy, but that isn't happening here," John Simpson said.

"The index, for me, shows whether this lag is something to do with a particular feature of the Northern Ireland economy, or whether there is something the Government can do to help."

Meanwhile public sector employment also fell during the same period - dropping by 1.1%.

Ulster Bank chief economist Richard Ramsey said: "The issue going forward is, the public sector will be going down when you bear in mind voluntary severance and exit schemes."

Belfast Telegraph