NI's Economic Growth 'Struggling'

Although the UK economy grew by 0.2% overall, according to GDP figures released on Tuesday, it has proved to be a mixed return for Northern Ireland.

Department of Enterprise Trade and Investment show Northern Ireland's service sector output is almost 16% below its peak in 2007, but manufacturing output has enjoyed its third consecutive quarterly rise.

During the last three quarters Northern Ireland's industrial production - the manufacturing sector - has risen by 6.7% compared to a UK average of 0.8%, which is good news.

Northern Ireland's industrial production even increased by 1% in the first quarter of 2011 compared to the previous quarter and was 5.7% higher than the same quarter in 2010.

Service Faltering

But the service sector continues to drag the economy down. The Business Services and Finance sector - which covers 45% of private sector services and covers everything from banking to PR and legal services - showed some growth in the first quarter but remains 31% below its 2007 peak.

Angela McGowan, Northern Bank Chief Economist (pictured) said: "There is no denying that the UK economy is struggling to keep its head above water at the moment.

"Quite simply, harsh austerity measures and economic growth are rarely happy bedfellows.

"This latest dip in growth is the result of the combined implementation of both spending cuts and tax increases in the UK," she commented.

"These measures have been imposed on the UK when the global economy was facing wider economic concerns in the form of an oil price shock, a Eurozone debt crisis and the Japanese earthquake," she said.

"The Coalition government has been very focused on cuts and has given insufficient attention to its growth strategy.

"Companies have faced volatile energy costs, high inflation as well as exchange rate uncertainty over the last quarter - which all adds up to low levels of investment.

"At the same time, households have faced high inflation and static wages, which has been reflected in the weak domestic demand for goods and services.

"Ultimately, low investment and frugal households combined with declining government spending means that all three of the major players in the economy are not working at full capacity; so it should be no surprise to government that economic growth is so fragile," the banking expert continued.

"Although this week's GDP estimate from the Office of National Statistics is a provisional one, the chances of the data being revised significantly upwards at a later date are very small," she concluded, yesterday.

(BMcC/KMcA)