Economic growth still lagging GB
NORTHERN is trailing behind the rest of the UK and will continue to do so for some time, experts warned yesterday.
Despite localised success stories from firms such as FG Wilson, Bombardier and Mivan, the ongoing stagnation in the construction sector and the forecast slashing of public sector projects will mean the province faces a much harder recovery.
The warning comes as it was confirmed yesterday that Britain's economy expanded at a faster pace than first thought with growth of 1.2 per cent in the second quarter of the year, a rate not seen for nine years.
The Office for National Statistics (ONS) upgraded its estimate for growth of gross domestic product (GDP) between April and June, from 1.1 per cent.
The advance - the strongest since the same figure was achieved in the first quarter of 2001 - was attributed to record-breaking gains in the construction sector, which helped lift the country's industrial production.
However, the construction sector has so far failed to rally here in the same way as in other GB regions leading to predictions of a possible 0.5 per cent growth for the year as a whole from economists such as Mike Smyth, head of the school of economics at the University of Ulster and Angela McGowan. chief economist for the Northern Bank.
Trying to remain optimistic Mr Smyth said there was more pain and some relief on the way.
“The private sector here is recovering but very slowly. It’s frustrating and at the same time I think there are some serious questions to ask. What are we going to do to try and replace that public expenditure that simply won’t be there?
“There is some very positive news longer term, like that we are going to get a lower rate of Corporation Tax (CT) but, again, we’re not even gearing ourselves up for that because dealing with the the cuts, replacing lost revenues and Corporation tax are inextricably linked.”
Ms McGowan said Quarter 2 GDP growth for the UK had been surprising and had served to emphasise the disparity between the province and GB.
“Unfortunately local economic growth levels will not have surged to the same extent,” she said.
“Northern Bank forecasts suggest that the local economy grew by only 0.5 per cent in Q2 this year. Unlike the UK, the construction industry in Northern Ireland is still contracting and our manufacturing and export base remain relatively small.
“In addition, Northern Ireland’s largest employer - the public sector - is in the throes of downsizing. However, should the local economy also have experienced a similar surge in private spending over the summer months we could see an improvement in the performance of some sectors such as personal services, retail and hospitality.”
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Weather for Belfast
Wednesday 30 May 2012
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