NISRA (the NI statistics agency) published it's latest data about Northern Ireland’s economic growth through to the end of 2017 (Quarter 4) on Thursday. The Northern Ireland Composite Economic Index (NICEI). The results make for uncomfortable reading- at the end of 2017 the economy was still growing but there were clear indications that the strength of our rather incomplete economic recovery is draining away.
Five key points that can be taken from this release are:
- First of all, a piece of good news. According to the NICEI measure, total output grew by 0.4% comparing the last four months of 2017 with the previous (third) quarter. That was the same as the measured growth of UK GDP at that time. All the main sectors- construction, services, production and public sector- contributed 0.1% points a piece to that growth.
- At the same time, the NICEI results continue to be very volatile on a quarter by quarter basis. The growth of 0.4% in Quarter 4 2017 contrasts with zero growth in the previous quarter and a decline in the quarter before that. In fact, in 6 of the last 20 quarters the NICEI indicates output decline in Northern Ireland (whereas growth has been continuous in the UK).
- It may therefore be more appropriate to look at annual growth rates and here the latest message is a very downbeat one. 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 is to note 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.
- Thursday’s statistics were about output but they also have rather grim implications for the level of productivity in Northern Ireland (see the UUEPC press release 10 April 2018). 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. By implication- a possible decline in productivity during 2017 (at a time when UK average productivity was either flat or growing slightly). During the two decades 1997-2016 the comparative productivity of the Northern Ireland economy, as measured by GVA per hour worked, was about 15-20% below the UK average and in the manufacturing sector the comparative productivity level was usually 1-15% below the UK average (UUEPC press release 10 April 2018). 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.