Economic Recovery 'Slow'

Gross Domestic Product, (GDP) only grew modestly at the start of the year - but making it likely that the Bank of England will keep interest rates at record lows for some months.

In NI, the Northern Bank's Chief Economist Angela McGowan (pictured) said: "Even with the expected catch-up activity after the bad weather at the end of fourth quarter in 2010, the UK has failed to impress in the first quarter of this year."

The faltering construction industry - across all of the UK - is hindering economy recovery with GDP expanded by only 0.5% between January and March, in line with forecasts, after contracting by the same amount in the final three months of 2010.

That means Britain's economy has barely grown since September and is lagging other leading economies.

Construction was the biggest drag, falling by 4.7% on the quarter and posting its worst performance since the first quarter of 2009 when Britain was deep in recession.

"GDP increased by 0.5% in the first quarter of 2011, following a decrease of 0.5% in the fourth quarter of 2010," the Office for National Statistics (ONS) said in a statement.

"The effect of the abnormal weather conditions in December 2010 is estimated to have subtracted 0.5 percent from growth in the fourth quarter.

"GDP is estimated now to have returned to the level in the third quarter of 2010," it added.

Commenting further, the Northern's Angela McGowan cautioned: "It is important to note that the economy has not actually gone into reverse and, while there are significant challenges ahead, there are also opportunities for growth," she said.

She said that, in Northern Ireland, the situation is broadly similar to the rest of the UK: "We face the same austerity and inflation pressures, but our manufacturing base continues to tap into the global recovery and we have also seen some good investments recently in the local financial and business service sectors.

"However, both NI and the [rest of the UK] have some distance to go before high and sustainable growth levels are achieved," she commented.

"Austerity measures, low household confidence and high inflation will continue to place downward pressure on economic activity; but the global recovery continues and should help to support UK growth going forward.

"In addition, unemployment levels, although edging upwards, have done so extremely slowly and, compared to many other advanced economies, the UK has lost fewer jobs," she said.

"Manufacturing continues to provide support to overall output levels and reinforces the need for a diverse portfolio when it comes to the national economy," she concluded.

(BMcC/GK)