Friday, November 18, 2005
Hain: desireablity of an island wide economy
Peter Hain talks to Nialll Stanage about the desireability of an all island economy. Scoop of the month, I’d say!
In future decades, it is going to be increasingly difficult to look at the economy of north and south except as a sort of island of Ireland economy. We are deepening north-south cooperation in a number of areas. The Northern Ireland economy, though it is doing better than ever in its history, is not sustainable in the long-term. I don’t want the Northern Ireland economy to be a dependent economy as it is now, with a sort of UK, ‘big brother’ umbrella over it. It needs to be much more self-sufficient, so that’s what we’re trying to do.
But that was only part of what he said. More later.
Mick Fealty @ 11:32 AM
George
1. There were a significant proportion of people alive in 1969 so it is in living memory.
2. You mentioned a Ulster-Clubs organised boycott of RoI goods. This was in 1986 beyond the last ten yearsyou claim I am only allowed to comment on.
3. The RoI has a tax system that is highly attractive to FDI, NI as part of the UK doesn’t so it gets less. This is a much more significant factor in why FDI is going were it is going that what the various political parties did or didnt do.
4. Foreign investors aren’t impressed when a party of government is connected with systematic criminality hence the recent EIU concern about Sinn Fein in government in the RoI.
5. Invest NI has shifted a focus to encouraging local entrepeneurship something needed to imporve the diversity of NI’s economy.“When you talk of the 1930s you talk as if the Republic was the place with the economic might, squeezing the poor north.”
I think your imagination is getting over-active. I said no such thing. You and BB have tried to blame the detrerioration of the economic relationship between North and South on the North. It wasn’t, a significant proportion was because of policy decisions in the RoI and generally to the detriment of the RoI economy. The climate has changed so the economic relationship can imporve again, good, trade is good.Brian Boru
1. The damage of the boycott lasted beyond it.
2. It was reinforced by the isolationist economic policies adopted and implemented by successive governments in the RoI basically from the 1920’s until the 1960’s. In the 1960’s both NI and RoI became more successful in attracting FDI. However, the progress of this decade was signiifcantly damaged by the outbreak of the Troubles. The troubles hampered the North-south economic relationship. In the last decade this situation has improved - more through business doing business than any political initiatives.Posted by on Nov 19, 2005 @ 04:25 PMFar from providing ‘leadership that’s working’, all the DUP has managed so far is barrel loads or reactive clamour.
Yes, Hain’s remarks were ill-advised. But let us be clear why.
Firstly, historically there has not been an all-island economy. Ever. It was the industrialization of the northeast of the island which led to it having different markets, different economic interests, and subsequently a different national affilation. In short, the main cause of partitition was the economic divide between an industrial northeast with much in common with Great Britain, and an agrarian rest-of-island which had little economically in common with it.
Secondly, they play into the view of your average ‘Prod-in-the-street’ that Hain is out to shaft them.
However, NONE of that is reason to suggest that the promotion of the island as an economic destination in the 21st century is necessarily a bad thing. Certainly for energy, tourism, leisure, perhaps even pharmaceuticals, construction and other key industries, it makes *a lot* of sense. Likewise the promotion of ‘cross-border’ regions (such as ‘the Northwest’). The only even occasional clients my own PR company has outside Northern Ireland are in Dublin, Donegal, Warsaw and Cape Town - make what you like of that.
So ill-advised yes, but not necessarily entirely wrong…
Posted by on Nov 19, 2005 @ 04:44 PM“So ill-advised yes, but not necessarily wrong....”
I would agree that spelling out the truth of their position to unionists won’t really start until after the IMC reports but Hain was speaking to an American audience which has seen through the bullshit a long time ago.
In the same way unionism should take on board his warning that being either anti-republican or anti-Catholic isn’t enough anymore. It’s long past time for unionism to develop some political policies if it wants to stay in business.
Posted by on Nov 19, 2005 @ 05:13 PMFair_Deal,
when I mentioned sticking to living memory, it was in reaction to you bringing up the trade boycotts of Northern Ireland companies as a contributing reason for the economic isolation of the border regions in 2005. I think that is more than a little bit ridiculous.Back in the 30s, the Republic was cut off from its industrial hinterland (the north east of Ireland) and its major market (over 85% of exports went to GB) but in 2005, it has recovered and has passed out the UK.
Why has it recovered?
Because it adapted to the new situation. Northern Ireland hasn’t adapted.
We can talk about the “Troubles” etc till the cows come home but my issue is post 1994 and its continuing failure to adapt and its dismal performance in the last decade.
Yes, I say dismal. Unionism is in total denial of the economic facts. UUP’s McGimpsey yesterday: “Northern Ireland is prospering and will continue to prosper.”
What world is he living in?
Sinn Fein is not the reason nobody is investing in Northern Ireland, the simple reason is because the choice for investors is north or south and south wins almost every time. 70 years ago, it was the other way around.
The problem for NI is that not only is it not interested in adapting, it doesn’t even have the power to adapt.
It is incapable of making the big decisions for itself and instead has put all its eggs in the UK basket.
The UK as unionism sees it only made sense when we were all in it.
McGimpsey again:
“The Republic of Ireland would be better off integrating with the United Kingdom rather with Northern Ireland.”That is the only thing that will save Northern Ireland as an economic entity. But both you and I know this isn’t going to happen so what does unionism and Northern Ireland do?
I’m open to suggestions.
Sorry, but I don’t share your enthusiasm for Invest NI. In the world of Industrial development authorities, it is Doncaster Rovers and the IDA is Chelsea.
But unionism would never countenance and all-island IDA. It is paying the price and will continue to do so.
Posted by on Nov 19, 2005 @ 05:28 PMGeorge
“But unionism would never countenance and all-island IDA. It is paying the price and will continue to do so.”
The IDA is a public body tasked with spending 26 County Tax payers money to get FDI for the 26 counties - How in reality could a 32 County IDA actually work ? - Get Real
All this kite flying about an All Island economy is by people who in practice do not appear to know what they are talking about.
I said at the very start of this thread that in the absence of Fiscal, Currency, Regulatory and Interest Rate conversion then all we are talking about here is good old International Trade.
The more of it the merrier - I have never met a northern businessman who objected - including ones who are erstwhile supporters of the DUP - to as much trade with anyone as possible.
Therefore I just don’t get all the talk on this thread basically saying that unionists need to get up to speed on the trade thing ?
Lets trade public services like hospital care as well
I don’t have the full text of Hain’s speech but what annoys me more than the “all Ireland bit” is the statement that the NI economy is unsustainable ?
What does that mean - nobody is talking about an Independent NI - therefore is he saying that current British economic policy as spearheaded by his Govt is failing the regions ?
Is he saying that it would be better for NI to join a UI and somehow all its economic ills would be solved ?Anyhow as the person charged with getting FDI this is an outrageous thing for him to say - he clearly has no heart for the job and should resign
Posted by on Nov 19, 2005 @ 05:58 PMJohn East Belfast,
back in 1998, I strongly believe that the British government would have given Northern Ireland the opportunity to adjust/align its corporate tax rates so that it could compete on a level playing field with the Republic if unionism agreed.It would certainly have allowed for the idea of a joint IDA.
Unionism considered this idea as weakening the union rather than what I see it as, a vehicle for strengthening the economy of Northern Ireland.
For me, they blocked any intelligent ideas to make the region stronger economically if the ideas involved the Republic. That’s why they castrated the North-South bodies.
Unionism made a terrible mistake, which the people of Northern Ireland will be paying for for a long time to come. There isn’t a snowball’s chance in hell of it happening now because Scotland, Wales etc. would say “what about us” but in the euphoria of 1998 and “peace” Northern Ireland could have got it.
That is just my opinion, I can’t prove the British government would have given it.
Posted by on Nov 19, 2005 @ 06:08 PMGeorge
Even if NI had the same Corporate Tax Rates as the ROI that would not have meant you could have had an all Ireland IDA ?
The IDA and Invest NI are competitors - I agree that in very rare circumstances there might be an opportunity to compete for the whole Island (possibly in North West) if the opportunity arose. However they will still be competing.
Also although I agree low Corporate taxes have been excellent for the ROI in attracting FDI for manufacturing and then retaining the important Research & Development activities - taxes still have to be raised somehow - higher income taxes, VAT and Stamp Duty for instance.
Therefore NI has to bear its share of UK Taxes because it bears more than its share of UK benefits.
Any opposition to North South bodies among unionists was/is due to others having ulterior motives for them
Posted by on Nov 19, 2005 @ 06:57 PMJohn,
anything is possible if the will is there. My argument is that the problems you mention, like tax take etc., were more likely to be ignored or glossed over in the “euphoria” of 1998.The chance was there for Northern Ireland to adapt to the situation it finds itself in, the only significant part of the UK, which isn’t on the same mass, which also has a land border with the eurozone.
I don’t see it happening now for reasons like you are giving. Why should Scotland be disadvantaged, for example? The goodwill towards Northern Ireland is also less in 2005.
As for ulterior motives, remember SF have 5 out of 166 seats in the Republic. These bodies were with the Republic not with SF.
Trust me, the only motives the Republic would have for these bodies are financial, for the sake of stability, growth, jobs, peace etc.
The population of the Irish Republic don’t have a hidden agenda when it comes to NI.
Unionists aren’t stupid but then again neither are we.
Posted by on Nov 19, 2005 @ 07:25 PMlots of highbrow and meaty comments, but the reality is the IRA created a cash cow for unionism, with the departure of the IRA the cash goes aswell, less cops, less squaddies, less civil servants, less handouts. Unlike elections in any other european country voters in NI don’t vote for parties because of their pledges on the economy. Its interesting to note that there is no mention of political parties on this thread
Posted by on Nov 19, 2005 @ 09:33 PMThe whole problem here is that Hain was making the speech in the first place, because our moron politicians have failed to sustain an executive with a Finance/Enterprise Minister who could have been making the speech instead.
The truth is that people like the DUP care less about supporting our local economy and more about blocking agreement - that is the situation that lead to this calamity involving Hain. They still haven’t learned that they can no longer get away with expecting the British government to do all the heavy lifting to make sure NI keeps running.
I don’t trust Hain or anyone else in the British government to speak up for our interests. I expect our local politicians to do it. How can they have the nerve for criticizing the British government for failing to do that which they refuse to do themselves ?
Posted by on Nov 19, 2005 @ 09:56 PM“Any opposition to North South bodies among unionists was/is due to others having ulterior motives for them “
The RNLI is an ALl-Ireland body and you don’t see the Unionists demanding that be scrapped due to a supposed threat of it leading to a United Ireland. Unionism needs to end its economic-isolationism that regards trade with the South as a step towards a UI. It was this mindset that decided to close down all the railways to the South except Dublin-Belfast. Reopen them that will encourage trade.
Nowhere else in Europe would having cross-border railways be considered a step towards one of the affected countries becoming part of the other state. Such nonsense is incredibly outdated and based simply on anti-Southern prejudice.
Posted by on Nov 20, 2005 @ 01:00 PMGeorge
The claim that all is needed for businesses to flock to a country is a ceasfire is a nonsense. Also the IRA and Loyalist ceasefires did break down and regularly breached. There have been a number of examples of large-scale public disorder in both communities in Northern Ireland. So the claim 1994 meant everything became hunky-dory is nonsense and should have produced an economic miracle foolish.
“I strongly believe that the British government would have given Northern Ireland the opportunity to adjust/align its corporate tax rates so that it could compete on a level playing field with the Republic if unionism agreed.”
Whatever your belief any evidence for this? The peace dividend package Tony managed to twist out of Gordon Brown was not profiligate and most of was a loan.
“dismal failure”
The economic performance of NI has been (or projected to be) higher or equal to the rest of the UK in the last few years and greater than the OECD average in two of the last three years. It has outperformed the eurozone economies as well so it is not the “dismal” failure you claim. It is enjoying its highest levels of employment for decades.
The construction and services sectors have expanded and despite the job shrinkage in manufacturing it is outperforminhg other UK regions in productivity.
In GVA from 1998-2003 it outperformed the UK regional average.
http://www.nics.gov.uk/economic.htm
NI also enjoys low inflation levels.
This progress does not mean we do not have systemic problems that need to be dealt with e.g. over-reliance on the public sector, lack of entrepreneurship. The focus on local entrepeneurship is one reason why FDI has received less attention over the last few years.
Also in terms of public sector reliance it is only the DUP that has made any demand for its roll-back. The main nationalist party SF/IRA want to be as wasteful of public resources in Northern Ireland as they propose to be in the RoI
“but in 2005, it has recovered and has passed out the UK.”
Donegal’s recovery doesn’t seem to be going so well.
Brian Boru
“Unionism needs to end its economic-isolationism that regards trade with the South”
No Unionist party has any opposition to trade with the RoI as part of its platform. Try and keep your claims about Unionism based in some form of reality.
Railways are not economically efficient if we want to promote trade is it not wiser to invest in road infrastructure to promote trade? Or are you obsessed with getting one back on Lord Craigavon?
Posted by on Nov 20, 2005 @ 01:45 PMBrian Boru
The RNLI was founded before partition. It is a BRITISH ISLES instituion not an All-Ireland one. On the island of Ireland it has two seperate regional offices one in Belfast and one in Dun Laoghaire plus a headquarters and six regional offices on GB.
http://www.rnli.org.uk/Downloads/fs1.pdf
Posted by on Nov 20, 2005 @ 01:57 PM“The economic performance of NI has been (or projected to be) higher or equal to the rest of the UK in the last few years and greater than the OECD average in two of the last three years. It has outperformed the eurozone economies as well so it is not the “dismal” failure you claim. It is enjoying its highest levels of employment for decades.”
Well it hasn’t outperformed the Republic which is in the Eurozone so your comment is misleading there. Also, 67% of the Northern economic activity is because of statist subventions and when British government cuts them back see how well you’ll do then in your beloved Union. And Donegal’s problems are because of partition cutting it off from its markets in the North and making it a peripheral region of the South. It is no indicator of the situation in the South in general.
Posted by on Nov 20, 2005 @ 02:00 PMThere is a need to cut the red-tape which prevents companies on both sides of the border expanding across the border. Examples include form-filling and different currencies, which affect the cost of imports and the confidence of exporters who can expect to lose orders if the currencies move in a particular direction making orders too expensive for companies on the other side of the border. Northern Ireland should have the Euro.
Posted by on Nov 20, 2005 @ 02:06 PMBrian
“There is a need to cut the red-tape which prevents companies on both sides of the border expanding across the border. Examples include form-filling and different currencies, which affect the cost of imports and the confidence of exporters who can expect to lose orders if the currencies move in a particular direction making orders too expensive for companies on the other side of the border. Northern Ireland should have the Euro.”
Form Filling ! - that major barrier to international trade !!
The EU did away with all that long agoCurrency
Any decent Financial Controller can hedge a currency blindfolded and lock in his margins at virtualy zero cost.NI join the Euro
Why just because the ROI have ?“Well it hasn’t outperformed the Republic which is in the Eurozone so your comment is misleading there. Also, 67% of the Northern economic activity is because of statist subventions and when British government cuts them back see how well you’ll do then in your beloved Union”
I bet at that point you stuck your tongue and shouted “So There” at your monitor.
Posted by on Nov 20, 2005 @ 02:22 PMFair_Deal,
“The claim that all is needed for businesses to flock to a country is a ceasfire is a nonsense.”I’m not saying that. I’m saying that I accept the changes necessary for investment could only come about after the “Troubles”. But none of the parties saw the bigger picture.
“There have been a number of examples of large-scale public disorder in both communities in Northern Ireland.”
Because both sides have failed to tell their communities the hard economic truths and instead pandered to their prejudices. For me, the parties carry substantial responsibility for the large-scale public disorder for their lack of leadership.“Whatever your belief any evidence for this?” I said I had no evidence. Just my view.
“The economic performance of NI has been (or projected to be) higher or equal to the rest of the UK in the last few years and greater than the OECD average in two of the last three years.”
The per capita GNI of NI in 1997 was 79% of the UK average. At the end of 2004 it was 79.1%. At that rate of outperforming, it will be level with the UK average in 735 years.
The jobs are in the public sector, in other words created with government handouts to create a feelgood factor. Manufacturing jobs have dropped 16% since 2000. That is dismal and I stand by it.
“It is enjoying its highest levels of employment for decades.”
It has added 100,000 to the incapacity benefit list in the last decade and sticking the rest in superfluous government funded jobs. No wonder unemployment is going down.
“Donegal’s recovery doesn’t seem to be going so well.”Minister for Enterprise Michael Martin revealed last month that unemployment in the Border-Midland-West region is now at 4.3% compared to 5.6% in the South East. Recovering very nicely thank you very much.
2 billion spent under the BMW Regional Operational Programme and the Atlantic Corridor should help too.
“No Unionist party has any opposition to trade with the RoI as part of its platform.”
Unionists should be actively leading the way. Not opposing simply isn’t good enough.
They should be demanding the North-South bodies start delivering rather than seeing ulterior pan-nationalist motives where there are none. That is more pandering to prejudices.On transport infrastructure, Northern Ireland will be putting just over 10% of what the Republic is in the next decade.
Posted by on Nov 20, 2005 @ 03:25 PMBut before I get berated by angry Donegal people, it needs continued support to get to the same wage levels as the rest of the country. Currently at 89% of EU GDP.
Posted by on Nov 20, 2005 @ 03:40 PM“back in 1998, I strongly believe that the British government would have given Northern Ireland the opportunity to adjust/align its corporate tax rates so that it could compete on a level playing field with the Republic if unionism agreed”
Statements like make me despair of the sheer ignorance of fiscal and economic machinery.
NI is in the UK if you give it separate more favourable taxation rates every financial controller worth his salt will migrate his taxation base to NI -(without moving a brick or a screwdriver). Its close relative was the crackpot suggestion by Trimple to align Excise duries.
The republic gets way with its “favourable tax regime” because it is a minnow in EC terms - It is however under notice from Brussels and in the horns of a dilemma because it is also under notice from the likes of Dell who will be off to Poland/Rumania/Hungary/etc at the sniff of a more beneficial Tax regime.
Incidentally bringing in almost completely assembled computers and snapping in one or two high value components (Processor and memory anyone)to qualify as EC goods hardly amounts to a computer manufacturing industry. Dell certainly will be able to do that much cheaper elsewhere.
Posted by on Nov 20, 2005 @ 04:39 PMThere is no way in this lifetime that the Treasury are going to countenance the idea of two tax systems within the UK. It is nothing to do with unionism.
Barnshee, Ireland’s IT industry goes beyond computer assembly. You may wait to sit around for the day when the RoI economy suddenly collapses; in the meantime, the rest of us can see that they have enjoyed remarkable economic growth over the past 15 years and we need to be a part of that if we are going to get anywhere. Recent events show that the British government are no longer in the mood to placate us with handouts.
Posted by on Nov 20, 2005 @ 05:06 PMCS
The republic has no high end computer industry, Repackaging don`t cut it. Despite claims to the contrary it remains the highest beneficiary of EC aid some £500 per head pr annum. A multiple of its nearest rival greece.
Economic growth how rae yePosted by on Nov 21, 2005 @ 04:21 PMBarnshee,
Ireland has an eternal veto on setting its corporate tax rate, which it negotiated in the 1990s with the EU. No reviews in 10,15, or 30 years. All we have to do is hold firm as they try twist our arm now. Who would believe that possible to achieve now? Nobody.In the 90s, things could have been achieved that are considered impossible now. I agree about flight from the UK but some sort of limited cross-border deal could have been possible. Don’t ask me how but the Irish have proven themselves quite creative when it comes to such things.
As evidenced by convincing the EU we needed the advantage of a lower corporate tax rate.
On computers,
take a trip to Leixlip and tell me if the Intel plant that’s there is “high end” enough for you.Fab 24 cost 2 billion and opened in 2004. Seems an awful lot of money to spend on a packaging plant. Oh maybe that’s because it isn’t a packaging plant.
On Greece, you are right that Ireland got more per capita:
€396 in 2004 as compared to 377 per capita for the Greeks.Although in terms of percent of gross national income (GNI), Greece got 3.52% while Ireland just 1.3%.
Posted by on Nov 21, 2005 @ 06:59 PMThe republic has no high end computer industry, Repackaging don`t cut it.
barnshee, I’m afraid this is nonsense. Intel have a key manufacturing plant there (which manufactures Pentium 4 chips from scratch); Dane-Elec have a memory production facility; Google, Ebay and Microsoft and local corporations such as Iona all have their European headquarters in Ireland. Lucent AFAIK has an R&D;laboratory out near Foxrock. All of these companies employ software engineers and technicians (not just telephone staff) and contribute to design and engineering work.
In Northern Ireland we similarly have large corporations such as Northbrook (= Allstate Insurance) and Liberty IT (= Liberty Mutual) which are here partly because of ongoing IDB grants. The critical factor is that NI’s grants system isn’t complemented with a favourable corporate tax regime which serves to discriminate against indigenous businesses.
Granted, a lot of these companies will tell you that a lot of this is to do with the tax and grants regime. But a lot of it is also to do with the relatively low-cost skilled labour that exists in Ireland due to the relatively good state of the education system. Exposure to the Euro is also a factor.
Posted by on Nov 21, 2005 @ 09:14 PMComrade Stailin
There is no way in this lifetime that the Treasury are going to countenance the idea of two tax systems within the UK. It is nothing to do with unionism.
They have already conceeded the principle by allowing limited tax variation in Scotland. If the NI parties come up with a plan that can reduce the cost of the north to London by encouraging an enterprise culture here then why wouldn’t they go for it.
After all it is they are telling the world the north is unsustainable the way things are.
Posted by on Nov 21, 2005 @ 09:25 PMThey have already conceeded the principle by allowing limited tax variation in Scotland.
Income tax only, and AFAIK they’re only allowed +/- a max. of 2 percentage points (and AFAIK they’ve yet to exercise the powers). I think it is different; different levels of income tax won’t shift businesses and investment between different parts of the UK. I don’t think they have conceded the principle at all.
Imagine if we had 10% corporate tax in NI. What would stop all the City of London companies closing up shop and moving to Belfast ? There’s no way in hell the UK govt is going to stand for that.
Even if we did get some sort of concession the UK would attach strings to it. For example, a reconstituted Northern Ireland Assembly which voted to re-nationalise the water service would find itself stripped of a series of treasury grants.
After all it is they are telling the world the north is unsustainable the way things are.
I think when the British say “unsustainable” they are complaining about having to constantly bail us out at a time when their own public spending is under pressure while we pay far less tax than anyone else in the UK as it stands. I don’t think it means they are talking about the entire economic model in NI.
Posted by on Nov 21, 2005 @ 09:45 PM
