Warning as North's economic growth shrinks to 1%

Economic growth has fallen to its lowest level since the 1980’s, the Economy Minister in the North warned today.

The housing slowdown and rising inflation restricted expected expansion to 1% this year, Arlene Foster added.

More people are claiming unemployment benefits and consumer confidence is declining, she warned.

“It would be the lowest rate of growth here since the early 1980’s,” the minister confirmed.

She told a meeting of her Enterprise, Trade and Investment scrutiny committee at Stormont that levels were in line with the rest of the UK but warned against too much despondency.

“It is important that we don’t overreact. We are still going to grow next year, we are not in a recession position and we don’t want to talk ourselves into a recession.”

Alliance committee member Sean Neeson said a fifth of the population was unemployed in 1982.

“The one thing we need is cool heads, we must not allow ourselves to talk ourselves into a recession.”

The minister admitted the number claiming unemployment benefit had risen by 18% since August last year, although from an historically low level, and said these were challenging times with the global credit crunch and pressure on banks.

The Office of the First and Deputy First Minister (OFMDFM) has written to the chief executive of the Lloyds TSB/HBOS following recent takeover plans.

“We are proactive but there’s no cause for concern at this time,” she added.

The Fermanagh and South Tyrone representative also announced a review of industry promotion body Invest NI, intended to involve independent experts.

Yesterday, addressing an audience of business people, public officials and academics at the 13th Annual Economic Conference in the Culloden Hotel Deputy First Minister Martin McGuinness said the financial practices which had created the financial turmoil needed to stop and responsible banking become the watch word.

First Minister Peter Robinson today cautioned against over-regulating financial institutions.

“An overlarge public sector is no way to run an economy but it does mean that we are somewhat insulated from the immediate consequences of the present economic problems but no-one should ignore the impact in the longer term of the decisions that the UK Government is taking in relation to public sector borrowing,” he said.

“The Executive cannot prevent the impacts of the economic downturn affecting Northern Ireland but we can make sure that we are positioned to build for the longer term. We must not be afraid to reform the way in which the public sector does business.”

He added nationalisation of banks or any sector of the economy may be a necessary expedient but was not a long term solution.

“The experiences of the last few months do not negate the fundamental reality that it is market economies and not centrally controlled economies that work.”