ULSTER BANK believes the recession is easing north of the Border, but warns that Northern Ireland’s recovery will lag behind economic growth in Britain.
Ulster Bank economist Richard Ramsey said key indicators suggested the worst of the downturn was over, but warned that major obstacles lie ahead.
He claimed the most serious phase of the house-building downturn had passed and the rate of job losses had eased. However, other factors that had boosted the region’s economy, including positive spin-offs from the Celtic Tiger, were now gone.
“Currently, the global, UK and Northern Ireland economies are seeing evidence of an easing of the recession,” he wrote in Ulster Bank’s latest Quarterly Economic Review. “We expect the local and UK economies to return to growth next year. But in many respects, returning to growth is the easy part. The biggest challenge is to recover the significant amount of output lost during the recession.
“Next year, our prediction is for the local economy to grow by around 1 per cent, compared to around 1.4 per cent for the UK as a whole.
“Beyond that, it is our view that Northern Ireland’s sustainable growth rate will be 2 per cent per annum on average, which we expect to be below the UK average.”
New figures released on Wednesday showed unemployment in Northern Ireland had broken through the symbolic 50,000 mark after a rise of 1,500 in the claimant count.
The number of people claiming unemployment benefits stood at 51,000 in July, up 23,900 (88.2 per cent) on the year.
The rise was the equal smallest in the last 11 months, but a recent run of planned redundancy announcements by companies will consign more people to the dole queues in the weeks ahead.
The seasonally adjusted unemployment rate measured by a labour force survey was 6.7 per cent for the period April to June – up from the 6.1 per cent in the previous quarter and well ahead of the 4.2 per cent recorded a year ago.
Mr Ramsey said Northern Ireland’s unemployment rate would rise to 8 per cent by the end of this year, averaging about 9 per cent next year.
“The rate of unemployment growth has clearly eased and our view is that around two-thirds of the total job losses expected during the recession have already happened.” – (PA)
