The economy in Northern Ireland faces long climb back to normal output

Last Friday’s figures from the Office for National Statistics (ONS) indicate that the United Kingdom economy continued its post-lockdown recovery in July.

Tuesday, 15th September 2020, 12:30 pm
The UK economy grew by an astronomical amount in the month to July, 6.6%. But it is still 11.7% down on its pre-virus level in February. It is fair to assume similar trends in Northern Ireland

The pace is, however, slackening.

It is early days, all these data include a lot of estimation, but it could be concerning that the initial growth spurt is already slowing down.

Whilst we don’t have as up-to-date data for Northern Ireland the likelihood is that the regional economy is tracking the United Kingdom performance.

Sign up to our daily newsletter

The i newsletter cut through the noise

Dr Esmond Birnie is Senior Economist Ulster University Business School

In the month to July UK Gross Domestic Product (GDP) grew by 6.6%.

Under normal circumstances that would be an astronomical growth rate month on month but it actually represented a decline on the monthly growth in June which was 8.7%.

The UK’s recovery out of the lockdown recession began back in May when growth was 2.4%.

What is highly significant is that UK GDP in July was still 11.7% down on its pre-virus level in February (output in services was 12.6%, in construction 11% and in production sectors such as manufacturing down by 7%).

If we assume broadly similar trends are happening here in the Northern Ireland regional economy (the available ‘timely’ data such as unemployment levels, business confidence surveys, numbers furloughed all suggest that it is unlikely Northern Ireland is performing better than the UK trend) then what might be some of the implications for the local economy?

It is going to be long climb back to regain the levels of output we had prior to lockdown.

Such recovery could take years.

The data on GDP are one possible justification for the policy approach to containing the virus outlined by the Stormont executive on Thursday.

Instead of a general Northern Ireland lockdown, which had such a large economic impact, we now have restrictions relating to social gatherings in specific localities.

Dr Esmond Birnie is senior economist at Ulster University Business School

——— ———

A message from the Editor:

Thank you for reading this story on our website. While I have your attention, I also have an important request to make of you.

With the coronavirus lockdown having a major impact on many of our advertisers — and consequently the revenue we receive — we are more reliant than ever on you taking out a digital subscription.

Subscribe to newsletter.co.uk and enjoy unlimited access to the best Northern Ireland and UK news and information online and on our app. With a digital subscription, you can read more than 5 articles, see fewer ads, enjoy faster load times, and get access to exclusive newsletters and content. Visit https://www.newsletter.co.uk/subscriptions now to sign up.

Our journalism costs money and we rely on advertising, print and digital revenues to help to support them. By supporting us, we are able to support you in providing trusted, fact-checked content for this website.

Alistair Bushe

Editor