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Coronavirus: Northern Ireland economic recovery to take years, says economist Esmond Birnie

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Recession warning: Rishi Sunak

Recession warning: Rishi Sunak

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Recession warning: Rishi Sunak

It could take years for Northern Ireland's economy to get back to where it was before the pandemic, a leading economist has said.

Dr Esmond Birnie, senior economist at Ulster University's Business School, said it was doubtful that Northern Ireland's recovery from the lockdown would be rapid.

The bleak assessment came as the UK economy contracted at the fastest pace on record in March as the coronavirus crisis puts Britain on the brink of the worst recession in 300 years.

The Office for National Statistics (ONS) revealed yesterday that activity plunged 5.8% in March in the biggest monthly fall since records began in 1997.

Coronavirus Data Graphs

The March tumble sent gross domestic product (GDP) down 2% overall in the first quarter - the biggest fall since the end of 2008 when Britain was at the height of the financial crisis.

The latest figures show the first direct effect of the Covid-19 pandemic on the UK economy after the country was placed in lockdown to control the spread of the virus.

But with the lockdown only coming into place on March 23, the second quarter will show the full hit on the economy after the UK ground to a standstill.

Experts said the first quarter data suggested the economy could contract by up to 20% between April and June as the full effects of the lockdown are captured.

In an article for today's Belfast Telegraph, Dr Birnie stated: "It will take several years to claw our way back to where we were in 2019 and the implication will be that the Covid-19 recession will impose lasting costs.

"The last recession in NI, the one which followed the banking crisis, was extremely protracted. According to the official measure of the volume of regional output, output peaked in Quarter 2 2007 and then declined all the way through to Quarter 2 2013.

"This time could be different but it would seem the NI economy has form in terms of allowing downturns to become very long -lasting recessions.

"There is a strong risk history will repeat itself, given that the virus has generated so much uncertainty and reduced business confidence very substantially.

"Unfortunately, there is precedent for not only very prolonged recession but also for the recovery phase being rather shallow," he added.

The Bank of England last week warned coronavirus could see the economy plunge by as much as 25% in the second quarter and fall by 14% overall in 2020 - the worst annual fall for more than three centuries.

London's FTSE 100 Index fell 1.3% after the GDP data and amid concerns over a second wave of coronavirus cases in countries that have started to reopen post-lockdown.

Chancellor Rishi Sunak has said it is "very likely" that the UK will face a "significant recession" as a result of the coronavirus crisis.

He told the BBC: "A recession is defined technically as two quarters of decline in GDP.

"We've seen one here with only a few days of impact from the virus, so it is now very likely that the UK economy will face a significant recession this year and we are in the middle of that as we speak."

The Institute of Directors said that the official data was a "sobering first glimpse of the economic turmoil caused by the outbreak".


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