Belfast Telegraph

Slowdown in Northern Ireland's economic recovery leaves it lagging behind rest of UK

By Margaret Canning

Northern Ireland's recovery from the economic downturn is lagging behind the UK, with output languishing at 6% below its peak, a study has warned.

According to the Composite Economic Index, improvements in the economy are still leaving it well below its peak performance 11 years ago.

Output fell by 1% during the second quarter of the year, with construction the only sector to expand.

However, the index did show "modest" growth of 1.7% in Northern Ireland and the UK alike in the four quarters to the first three months of 2017, compared to the previous 12 months.

But a report from the Northern Ireland Statistics and Research Agency (Nisra) also showed that growth in both the UK as a whole and in Northern Ireland was being eclipsed by the Republic, which enjoyed growth of 5.9%.

However, Northern Ireland's 1.7% annualised growth was better than the 1.1% expansion of the previous two-year period, which Nisra said was some evidence of improvement.

It added that declining growth in Northern Ireland in the second quarter was driven by falls in the production sector - covering manufacturing - the services sector, which embraces everything from estate agents to restaurants, and the public sector.

But the construction sector showed growth of 0.4 percentage points.

Danske Bank economist Conor Lambe said Northern Ireland was suffering the same economic malaise as the rest of the UK.

"The drivers behind the slowdown in the local economy are the same as those affecting the rest of the UK - a consumer squeeze brought about by high inflation and Brexit-related uncertainty weighing down on business investment," he added.

"Looking out over the rest of this year and into next year, we expect the Northern Ireland economy to grow by 1.2% in 2017 and by 1% in 2018."

Nisra said the private sector had grown by 0.7% over the year but had shrunk by 1.2% over the quarter. Public sector jobs fell by 0.3% both year-on-year and over the quarter.

Average private sector growth over the four quarters - compared to the previous four quarters - was 2.6%. The public sector jobs index fell by 1.2% over the same period.

Despite some signs of longer-term improvement, Nisra said growth in Northern Ireland was still below peak.

"The Northern Ireland Composite Economic Index is currently 6.1% below the maximum value recorded in quarter four 2006," it added.

That continued below-par recovery contrasted with the rest of the UK. "In quarter two 2017, UK GDP was estimated to have been 9.3% higher than its pre-economic downturn peak of quarter one 2008," Nisra said.

"The latest results continue to show that the UK has had a shorter downturn with a faster recovery than in NI."

Nisra said yesterday's report was its third Composite Index since the EU referendum and that it was "not possible" to separate out the vote's impact.

Belfast Telegraph

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