Slugger O'Toole

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Believe it or not, the economic recession has been worse in the north than the south…

Fri 14 February 2014, 10:30am

The economist Michael Burke has made some interesting comparisons between northern and southern economic outputs using a measure called GVA which strips out the influence of tax and subsidies:

NI ROI GVA figures

The effect of comparing the data may be surprising. These show that recessions occurred both sides of the border at the same time but that the recession in the North was more severe.

Real GVA in the South fell to a low in 2010 and has since recovered slightly. The links to the relevant statistical data are provided here and here. There is as yet no recovery in NI.

The actual decline in real GVA in NI was 11.3% while the real decline in GVA in RoI has been 3.3%, although at its low-point it was a slump of 4.9%. This is shown in the chart above where both have been rebased so that the indices in 2010 equal 100.

To provide some background, you can see from this second chart the catch up effect of the Tiger economy (much of which, let’s note, has not gone away you know). Burke notes of this date from the Nerin Institute:

NI ROI GVA 2

From 2000 to 2007 the level of real GVA in NI expanded by 24%. Over the same period GVA expanded in RoI by 40%. The slump saw real GVA fall by 6.2% in RoI from 2008 to 2010 and it has since recovered less than half of that loss. By contrast real GVA in NI fell by 10.9% over the same period and there has been no recovery. The cumulative fall in real gross value added to 2012 has been 11.8%.

The truth is that with all such divergences these trends are long and deep and arise from radically different policy tracks. Ireland doesn’t have a Nordic model, partly because of some the cultural differences highlighted by Ian here. But in part too because it has few natural resources it can easily exploit, like Norwegian oil, or Swedish hydro electric.

Our greatest asset is our people, and it is that which needs investing in. The idea that dropping NI’s corporation tax is a win all strategy ignores the problems in education, and in an infrastructure that are likely to become strained over the medium to longer term as peace settles in again.

What NI needs just to begin catching up is some competent politicians who know what a good deal tastes and feels like. Yet the political focus remains as ever on what needs to be got rid of (like #flegs and Orangemen) rather than what demands the future is likely make of us.

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Comments (10)

  1. Nevin (profile) says:

    “What NI needs just to begin catching up is some competent politicians who know what a good deal tastes and feels like.”

    When can we expect to see this ‘good deal’? With the political tinkering post-St Andrews the 1998 ‘tug-of-war’ arrangement just got worse :(

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  2. Rory Carr (profile) says:

    Only yesterday while reading a fascinating (truly!) tome on the history of double-entry accounting* (and its apparent failure to divulge the weaknesses inherent in the asset accounting of RBS et al) I came across this excerpt from an address by Bobby Kennedy which is well worth pondering I do believe. It’s as though Kennedy were imbued with the spirit of Marxist social morality.
    ________________________________________________
    *Double Entry – How the merchants of Venice created modern finance.
    by Jane Gleeson-White. Allen & Unwin 2012.
    ________________________________________________

    “Robert F. Kennedy on what GNP means.

    “Below is a quote from Bobby Kennedy on what the Gross National Product means and more importantly what it does not mean. He would have a made a fine economist…

    Too much and too long, we seem to have surrendered community excellence and community values in the mere accumulation of material things. Our gross national product … if we should judge America by that – counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for those who break them. It counts the destruction of our redwoods and the loss of our natural wonder in chaotic sprawl. It counts napalm and the cost of a nuclear warhead, and armored cars for police who fight riots in our streets. It counts Whitman’s rifle and Speck’s knife, and the television programs which glorify violence in order to sell toys to our children.

    “Yet the gross national product does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages; the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage; neither our wisdom nor our learning; neither our compassion nor our devotion to our country; it measures everything, in short, except that which makes life worthwhile. And it tells us everything about America except why we are proud that we are Americans.

    Robert F. Kennedy Address, University of Kansas, Lawrence, Kansas, March 18, 1968

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  3. Rory Carr (profile) says:

    The reference to “Whitman’s rifle” in my above post alludes to the mass murderer, Charles Whitman who, on 1st August 1966, after killing his mother, climbed the clock tower of the University of Texas, Austin and from there shot and killed 14 people before being shot dead himself by a police officer.

    “Speck’s knife” refers to Richard Benjamin Speck, who systematically tortured, raped, and murdered eight student nurses from South Chicago Community Hospital on July 14, 1966.

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  4. mr x (profile) says:

    Perhaps the North could copy the South’s education model.

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  5. redstar2011 (profile) says:

    This doesn’t surprise me in the least .

    Property prices rising steadily in the 26 whilst up here its stagnant.

    And don’t go by some of the old tosh reports in the BT about rises. I had my house valued 3 years ago and each January since. Not a penny of a rise yet

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  6. FuturePhysicist (profile) says:

    Changing the colours between graphs confuses people, this is supposedly an Northern Irish forum, where colours are important!

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  7. streetlegal (profile) says:

    Just imagine what it would have been like if Stormont ministers hadn’t been able to spend English money like water…

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  8. Pasty (profile) says:

    “Yet the political focus remains as ever on what needs to be got rid of (like #flegs and Orangemen) rather than what demands the future is likely make of us.” – could easily and more accurately be that the political focus from Unionists is not on education or bread and butter but more on the need to fly a Fleg and hold numerous parades through areas where the locals don’t want them.

    Unionists have no problem getting their kids out to learn how to beat drums and play sectarian tunes on flutes but especially in areas like the Shankill they can’t be bothered or see no need to get them to go school.

    But I’m sure you can also find a way of locating the lack of education in the Unionist areas at the door of them there pesky Nationalists. After all those young Unionists wouldn’t need to miss school to learn how to play those flutes and drums if the Nationalists didn’t keep demanding civil rights and Democracy for ALL.

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  9. IJP (profile) says:

    The survey covers the real economy (not that GVA is a perfect measurement).

    But of course, during that time, the Republic has suffered more than the North because it isn’t insulated by the public purse.

    Indeed, the SDLP and Greens even opposed changes to public sector pensions; whereas 15% salary cuts were the norm across the border.

    What this really shows is that we in NI continue to be insulated from the real world in which the Republic lives.

    Redstar

    Rising property prices are not necessary, nor even really desirable, for a properly growing economy.

    (West) German living standards have increased compared to British since the mid-70s, yet in that time, in real terms, British property prices have more than doubled and German have fallen…

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  10. Angus McLellan (profile) says:

    Interesting claims, but I’d want to know which ONS GVA statistics Burke was using there. The timing of his article raises concerns, given that he uses the word “recent” when mentioning the stats. The experimental ones released in December 2013 were seriously flawed, for which read “total rubbish”, as outlined here in the FT [in the note at the end].

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