Business

More signs of economic recovery

SIGNS of a recovery in the economy continued as growth in the UK GDP doubled in the last quarter. But Northern Ireland continues to lag behind Britain as it struggles, according to analysts.

Official figures from the Office for National Statistics (ONS) showed the UK economy grew by 0.6 per cent in the three months to the end of June.

PwC's chief economist in the north Dr Esmond Birnie said that although it pointed to a more stable economy, the picture in Northern Ireland was less certain.

"Northern Ireland's significant structural problems remain. Total economic inactivity in the second quarter of 2013 increased by 6,000 on

2012, while the total number of employee jobs in March 2013 was 1,510 lower than the previous quarter," he said.

"So, while this preliminary GDP data is welcome and encouraging news for Northern Ireland, we should not assume that the level of recovery becoming apparent in the English regions will automatically happen here."

The statistics prompted British chancellor George Osborne to say the economy was finally "on the mend".

For the first time in almost three years, all four main sectors showed improvement.

The estimate of a 0.6 per cent rise in gross domestic product (GDP) was the first time since 2011 that the UK has seen back-to-back quarterly growth.

It was in line with expectations but the fact that the struggling construction and manufacturing sectors managed to swing into expansion were seen as particularly encouraging as it suggested a broad-based improvement.

Danske Bank's chief economist in Northern Ireland Angela McGowan said after a number of positive indicators, "these latest GDP figures were largely expected".

"For Northern Ireland, the UK's recovery is very important, since any pressure in the UK economy can quickly reflect on our block grant and lead to an overall reduction in sales from NI to the GB region," she said.

"A rebound in the UK economy, on the other hand, helps to contain public expenditure pressures locally and results in greater trade."

Ulster Bank economist Richard Ramsey said the figures were welcome, "as the overall health of the UK economy is the most important driver of economic activity in Northern Ireland, particularly when the Republic of Ireland remains in recession".

But he said there was a long way to go until the UK was out of the economic doldrums.

"Following these numbers, the UK economy has recouped just over half of the output it lost during the recession, and recouping all of this would require 0.6 per cent growth in each of the next six quarters," he said.

"That is, the size of the economy would only return to where it was in Q1 2008 by Q4 2014. This highlights the long, slow road to recovery that the UK economy, and by implication Northern Ireland, faces."

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