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Issue No.7 Winter 2001
Harsh Reality of Northern Economy
By Laura Duffy
Despite predictions that the north will be relatively
unaffected by the downturn in the global economy there is little comfort in the
fact that the perception remains that Northern Ireland is no more than an
economic backwater region of the UK. Currently thousands of jobs are being lost
on a global scale, a trend has been exacerbated by the events of September 11th.
Thousands of jobs have been already lost in the north and there is no indication
that a major upturn in the fortunes of local industries is in the offing. The
demise of agriculture, the pig industry, the impact of sanctions on meat
exports, the decimation of the aircraft, shipbuilding, textile and manufacturing
industries and the already hard hit tourism industry are clear indications that
the north's economy has reached an all time low ebb. Take into account losses in
the security industry; the prison service, police, RIR, contractors, etc; it
paints a bleak picture.
The North's structural weaknesses not to mention
the ongoing impact of the relative violence and international perceptions will
continue to impact future economic trends. There is much work to be done before
the north can be seen and accepted as a forward and outward looking region that
will attract the necessary inward investment. There is need to consolidate
political stability.
A report on the North's economy just published by
First Trust predicts that the UK economy will weather the economic storms
blowing over the US and Europe. Michael Smyth a lecturer in economics with the
University of Ulster outlines five feature which he claims will reduce the
effects of economic slowdown on the North:
… it is less exposed to the vagaries of world trade than any other regions
… it is more dependent on public expenditure than most other regions
… it is more dependent on trade with GB than most other regions
… the tourism sector is small and underdeveloped
… It has a small ICT (Information Communities technologies)
All of the above factors says Mr Smyth '"serve to insulate the northern
Ireland economy from any negative economic effects of the slowdown of the world
economy in the months ahead."
The report points up future trends in the GB economy as looking good for the
next twelve to eighteen months. Ironically it also points out that it is the
North's structural weaknesses that will prove be to its source of strength. But
the fact remains that most employment is contained within the public sector and
major investors are still looking over their shoulders particularly in tourism.
In this industry confidence is lacking and so too is reality. Howard Hastings
president of the Hotels federation here commented, "If Northern Ireland had
escaped a generation of unrest and visitor numbers had continued to grow we
would have welcomed five million visitors in 2000." Most tourists remain
domiciled in the safety of southern Ireland whose infrastructures caters for
their needs. They make short one day visits to the North.
The North must be the mostly subsidised region in
the world. In the months ahead almost 430 million will come on stream from EU
funding bodies. Over 80 million has been designated to the rural economy,
millions more EU monies earmarked for the border region, millions for cross
border businesses, community projects and infrastructure needs. Thousands of
people are finding employment in the South, the black market economy is thriving
and petrol stations north of the border are as rare as hens teeth. Already the
North is gearing up for another Drumcree.
The minister for Enterprise, Trade and Investment , Sir Reg Empey had just
received a budget of £256 million. From this he designated 30 million to
support small businesses. SME's (small & medium enterprises) are the corner
stone of the northern economy and are as vulnerable to market forces as major
investments. A further 20 million to develop tourism, about a fifth of what is
required. Almost 140 million will go to promoting the north as an attractive and
competitive location for inward investment. The north's ICT sector is the most
underdeveloped within any of the G7 countries or regions and faces stiff
competition from the Republic which means it will likely remain underdeveloped
unless it is developed within an all-Ireland context.
The fact remains that despite the predictions the
North will remain a 'cold house' for future inward investment and tourism as
long as its future political stability is in question and international
perceptions are not redressed. The EU or Peace 11 cornucopia is fast drying up
and unless sustainability objectives are met thousands of jobs in the social
economy will eventually go to the wall, not to mention the loss to marginalised
communities and groups that will have developed their resources and services.
Public expenditure has and will reach unprecedented levels. These are harsh
realities that we have to face up to now if we really want to see a clearer
vision of the future and face it with realism and co-operation. It really is the
only way forward.
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