NI ‘in the slow lane’ as growth dwindles away says Birnie

Low productivity impacts on tax raising, incomes and spending as well as the strength of export earnings
Low productivity impacts on tax raising, incomes and spending as well as the strength of export earnings

Northern Ireland’s “rather incomplete recovery” was “draining away” by the end of last year leading economist Esmond Birnie has claimed as government figures revealk a widening gulf between productivity in the province and the rest of the UK.

The latest data from the Northern Ireland Composite Economic Index shows the economy shrank by 0.2% in Q4 2017 against the the year before.

The information from the NI statistics agency NISRA is further evidence of the province’s failure to increase productivity said Dr Birnie, fomer MLA and political advisor.

Now senior economist at the Ulster University Economic Policy Centre, he said the findings made for uncomfortable reading.

“According to the NICEI measure, total output grew by 0.4% comparing the last four months of 2017 with the previous (third) quarter,” he said highlighting one pice of ‘good news’.

However that growth was in contrast with zero growth in the previous quarter and a decline in the quarter before that.

“In fact, in six of the last 20 quarters, the NICEI indicates output decline in Northern Ireland, whereas growth has been continuous in the UK,” he said.

“In the year to quarter 4 2017 total Northern Ireland output actually declined (by 0.2%) compared to 1.4% growth in the UK and 7.8% in the Republic of Ireland.

“Various comparisons of “smoothed” growth rates confirm that Northern Ireland is lagging the UK average by a substantial margin.”

Another way of indicating just how weak the recovery has been in Northern Ireland, he said, was that quarter 4 2017 output was still 5.6% lower than the previous- pre-banking crisis/recession- peak in quarter 2 2007.

“In contrast, UK GDP is now 10.7% above the previous peak.”

Having written extensively about the production deficit, Dr Birnie said the latest statistics had “grim” implications for the level of productivity .

“The NICEI indicates total Northern Ireland output declined by 0.2% during the year to quarter 4 2017. Earlier NISRA data recorded a 2% growth in the number of employees during that same period.”

During the two decades to 2016, he said comparative productivity of the Northern Ireland economy, as measured by GVA per hour worked, had been around 15-20% below the UK average, while in manufacturing, sector the comparative productivity level has been 1-15% below.

“So, the latest data suggest an already low level of comparative productivity may be falling in relative terms and the negative implications of that for competitiveness may themselves be part of the explanation for the disappointing performance in terms of economic growth.

“In short, a disappointing performance and one that becomes especially challenging as we linger in a situation of “no” or “semi government” with a consequent policy vacuum.”