Page last updated at 07:01 GMT, Friday, 14 August 2009 08:01 UK

Worst of NI downturn over - bank

Bank notes

A local bank is claiming that the worst of Northern Ireland's economic downturn is over - but NI's recovery will lag behind that of the rest of the UK.

The Ulster Bank says major obstacles lie ahead and the biggest challenge will be recovering the significant amount of output lost in the recession.

Its economist, Richard Ramsey, said the worst of the house-building downturn seemed to have passed.

But he said other factors which had boosted the NI economy had now gone.

Mr Ramsey predicted that Northern Ireland's unemployment rate would rise to 8% by the end of this year, averaging about 9% 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," he said.

Growth

"However, there are significant concerns regarding the labour market in the years ahead, not least the rate of youth unemployment and the level of economic inactivity in Northern Ireland - the latter being higher than in any other part of the UK."

The bank predicts that Northern Ireland's economy will grow by around 1% in 2010, compared to around 1.4% for the UK as a whole.

"Beyond that, it is our view that Northern Ireland's sustainable growth rate will be 2% per annum on average, which we expect to be below the UK average," Mr Ramsey added.

Meanwhile, the latest survey of businesses across Ireland shows that more than half reported a continuing drop in turnover.

However, the report on the second quarter of this year, by InterTradeIreland, indicates that the economic decline has bottomed out.

InterTradeIreland's Director of Strategy Aidan Gough said: "The emerging picture points to a U-shaped recession - the question now is how wide the trough will be?

"Restoring competitiveness is the biggest challenge facing firms and they are currently seeking to reduce costs across the board in order to be able to take advantage of any upswing."

The survey, involving telephone interviews with 1,000 owner/managers north and south, was carried out last month by Millward Brown Ulster and covers the period April to June 2009.

The survey confirmed southern companies are continuing to suffer more than northern firms, reporting a drop in turnover of 72% compared to 44%.

The sectors worst affected are manufacturing, construction and the hospitality industry.



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