Tuesday, December 11, 2007
Belfast: slow growth and low cost labour…
Cheap labour is something of an advantage when touting for foreign inward investment. There’s an interesting study out from the Centre for Cities a policy development unit within IPPR. Interestingly Belfast barely features in the news story, but if you dig there is plenty of note. For instance, of 60 cities, Belfast has the slowest growth (-0.8% over ten years). It also has the lowest employment rate at 63.4%. It also has the lowest wages. £395.7 is the average wage in Belfast, a long way behind top earners London which comes in at £675.1, or even number two Cambridge which tops out at £650.1. Along with slow economic growth and a manufacturing output that is 2% down on the 4th quarter last year, our procrastinating ministers clearly have a major job to do at an inopportune point in the economic cycle.
Mick Fealty @ 11:01 AM
Depressing figures. When linked with the insane property prices you get some idea of the bubble we are living in. The report records house price inflation as still being at 40%.
Posted by on Dec 11, 2007 @ 12:55 PMWell they’ve been dropping in London for three quarters. It depends on how far this credit crunch bites into the real world economy.
Posted by on Dec 11, 2007 @ 01:03 PMNot quarters, months. Doh!
Posted by on Dec 11, 2007 @ 01:04 PMNo real suprises here. Such an economy as we have is dependent on fiscal transfers from Surrey and Sussex, loose credit, thousands of empty flats that no-one wants to live in and self-delusion.
God alone knows what will happen when the property market goes tits up; but it won’t be pretty and the people who believe in soft landings would be better off believing in Santa Claus.
On the plus side, I get the sense that the idea that because we’ve stopped killing each other, the world owes us a living, is taking a bit of a hammering. This is a good thing. It was really quite widespread a few years ago.
Posted by on Dec 11, 2007 @ 01:10 PMWhy would a reduction in property prices “not be pretty”?
It would surely mean smaller mortgages for people and more disposable income to spend in the economy.
Posted by on Dec 11, 2007 @ 01:15 PMNot pretty for speculators willowfield. Great news for first time family buyers.
Posted by on Dec 11, 2007 @ 01:43 PMwillow,
Well I guess if interest rates keep lowish it will be okay for most owner occupiers so long as people are happy to sit tight.
Posted by on Dec 11, 2007 @ 01:47 PMWhy would a reduction in property prices “not be pretty”?
For me it would be fine (more than fine, it would be delightful). Not so much for the poor craturs who have mortgaged themselves to the oxters to buy crap houses in bad areas.
Also, not so good for an place where construction is one of the main economic drivers.
Posted by on Dec 11, 2007 @ 02:10 PMif interest rates keep lowish
Therein lies a big part of the USA problem, Mick.
When there was an excess of cash floating about a few years ago, loads of people were given “sucker” mortgages at an extremely low rate for the first few years. Lots of those loans are about to come due at a much higher rate.Posted by on Dec 11, 2007 @ 02:13 PMThere does seem to be some sort of correlation between house prices and perceived wealth. Willowfield is of course correct but people do not seem to think that way.
I frequently explain to people that provided they do not get into negative equity a fall in house prices is only a problem if you own property to make money from the rise and not to live in or if you wish to move to a cheaper house.
Even negative equity, if you can afford the morgage repayments, and do not need to move is not necessarily a disaster.
Yet people still seem to feel they are richer if their house if deemed to be worth more. I do find it a rather odd way to view the world.
Posted by on Dec 11, 2007 @ 02:14 PMMick
Indeed there is a big job for Ministers here if they are to make any dent in the attempts to turn the economy round.Mind you - that wont be helped by the constant whinging by the people who still think that Northern Ireland should be some kind of public sector sponge and that every problem can be solved by throwing Government money at it.
Posted by on Dec 11, 2007 @ 02:15 PMWillow
the obvious thing for not being pretty is that if you have a mortgage on 150,000 but your house is now worth only 125,000 you are on the horns of a dilemma. Do you continue over paying on a mortgage and hope the prices recover or do you walk away and destroy your credit rating? Neither choice is particularily appetising add to that depends on how your mortgage laws and your mortgage is written the actual interest you are charged can rise 2 or 3 times higher than the prime rate banks advertise.For economic growth the most obvious answer is tourism. When I was there tourists were fairly light on the ground especially tourists who spent more than a weekend there. Obviously the world is starting to take notice but every bonfire littered with sectarian bile and every parade riot lowers your potential growth. Thankfully they are becoming less common.
For all the claims that the 12th will some day morph into an “Orange Fest” I do not see that happening until the orange order quits insisting it has the right to march where it is not wanted. Derry is a prime example that if the orange orders quit being so militant in their demands for the right to march then the nationalists become less militant about their rights not to have them march. If the Orange Fest is truly going to happen it will take work from both communities not just a couple of bouncy castles and some sugary drinks
And just as an aside, the place could do with a really comprehensive litter campaign, especially Belfast
Posted by on Dec 11, 2007 @ 02:27 PM“For all the claims that the 12th will some day morph into an “Orange Fest” I do not see that happening until the orange order quits insisting it has the right to march where it is not wanted. Derry is a prime example that if the orange orders quit being so militant in their demands for the right to march then the nationalists become less militant about their rights not to have them march. If the Orange Fest is truly going to happen it will take work from both communities not just a couple of bouncy castles and some sugary drinks”
In the first instance, keeping the fucking shops open on the 12th would be a start.
Posted by on Dec 11, 2007 @ 02:32 PMSteve
the obvious thing for not being pretty is that if you have a mortgage on 150,000 but your house is now worth only 125,000 you are on the horns of a dilemma. Do you continue over paying on a mortgage and hope the prices recover or do you walk away and destroy your credit rating? Neither choice is particularily appetising add to that depends on how your mortgage laws and your mortgage is written the actual interest you are charged can rise 2 or 3 times higher than the prime rate banks advertise.
The vast majority won’t be in that situation. And even for those in that situation, they are no worse off month-to-month as their mortgage payments continue regardless of the value of the house. They’re still going to be paying the same mortgage payment whether or not the value of their house drops. So unless their income also falls they are no worse off.
So how does that effect the economy?
Posted by on Dec 11, 2007 @ 02:44 PMThese figures say more about Belfast’s council boundaries than anything else. The other cities council areas encompass the suburbs whereas Belfast does not.
Therefore the inner city flight is represented in greater proportion in Belfast than anywhere else.
Its also important to note that all the figures associated with Belfast are measured by a different organisation using different methods therefore they must be taken with a pinch of salt.
What it does show is that Belfasts inner city does need regeneration and how much the suburban development has harmed the city. (As if we didnt know that).
Posted by on Dec 11, 2007 @ 02:52 PMI suspect the ‘doo doo’ might be wee bit deeper than that ken!
Posted by on Dec 11, 2007 @ 02:54 PMLots of those loans are about to come due at a much higher rate.
Same story in the UK and Ireland; also a huge buy-to-let sector just waiting to ruin the financial futures of thousands of amateur Warren Buffets.
These figures say more about Belfast’s council boundaries than anything else. The other cities council areas encompass the suburbs whereas Belfast does not.
Not true in an awful lot of cases. Manchester, Liverpool, Newcastle, Leicester, Nottingham, Bristol, Glasgow…
Posted by on Dec 11, 2007 @ 03:12 PM“the UK and Ireland”
Meaning?
“The UK and the Republic of Ireland”, or “GB and Ireland”?
Posted by on Dec 11, 2007 @ 03:14 PMOk sorry I worded it badly - the main disparity seems to be that the figures quoted for the cities is a PUA figure which apparently is a ‘Primary Urban Area’ and is “a measure of the built up area or ‘physical city’” *except* for Belfast which appears to be the city council area only.
I am surmising this because of the quoted 63.4% employment rate in Belfast. The NI employment rate is rising and was 69% in 2006 (DEL Labour market survey). Belfast city council area includes some of the worst performing areas but the Belfast travel to work area adds in many of the highest. I suspect that there is an anomaly here. I would imagine if the goalposts were the same Belfast would fare better in the survey. Even taking the 69% figure (and I would imagine this would be higher given the greater economic activity in the Belfast travel to work area) then this would take Belfast out of the bottom 10 and into mid pack (compariable with London at 70%).
Either way because of the differences in surveyed areas and techniques I think any comparison wouldnt stand up which is perhaps why Belfast isnt mentioned much in the press briefings.
Posted by on Dec 11, 2007 @ 03:44 PMMeaning?
“The UK and the Republic of Ireland”, or “GB and Ireland”?
The same thing. Duh.
What has this got to with the price of houses anyway? Pedantry is not a substitute for argument.
Posted by on Dec 11, 2007 @ 03:55 PMmnob: Belfast city council area includes some of the worst performing areas
Valid point mnob and I think your remarks undermine the validity of this report - particularly the Belfast results.
There is not much proper economic data gathering at a Belfast urban level - for example, it’s one of the few European cities for which you can’t gather GDP or GVA data.
This in itself raises a weakness about administration in NI. Policy, planning, data collection, administration are more or less focussed on a regional level and ignore the need to have a different set of aims and objectives for large urban areas. The result? A joined-up approach to Belfast’s urban development is impossible. No one’s in charge of the city or setting a strategy or plan for future development.
(You could mention the BMAP - but I think it’s sheer rubbishness actually reinforces my point.)
Manchester has its act together. Its organisations work in unison. Here is Belfast, everything is muddled and half arsed (and the result? John Lewis decision, national stadium decision, the very existence of Castlereagh council, commuting problems, over heated housing market, falling urban population, no Belfast economic strategy, etc.)
Posted by on Dec 11, 2007 @ 04:15 PMYou’re absolutely right, Baudrillard.
In NI, our political masters are more concerned with making sure Belfast city council remains under “no overall control” than by creating a local government unit that actually covers the whole city.
They won’t extend the boundaries because that would mean (gasp!), unionists would be in a majority.
Pathetic.
Posted by on Dec 11, 2007 @ 04:38 PMMaybe now the Provos and DUP control everything else they can sort out Belfast City Council.
Posted by on Dec 11, 2007 @ 05:17 PMAside from the understandable concerns over house prices, the question of an absence of economic growth at this point is one of extreme importance. Perhaps our Assembly will get round to debating it? I very much look forward to that.
An absence of war alone is not enough to attract outward investment - that lesson should be learned by now. Tourism is the industry Ian Paisley has seized upon, and will be a start. However, the biggest problem the North has to face is surely its dire education system.
High-value jobs (to whom?), such as those which go a long way to explaining why London tops this poll, are created on a basis of a superfluity of talented and highly-qualified individuals. This is not the situation we face. Rather, one in four is illiterate. We cannot, then, trade on our brains.
Shall we then find another way? How about persuading Gordon Brown to allow NI to match its corporation tax rate with the South? Our devastating negotiators appear to still be working on that front.
How about encouraging business creation from within? Raising a generation that believes in itself, that its worth is equal to that of any other country? That would take too long, a bit like educating people.
How about attracting back some of those lost to the brain-drain? A little like America claimed Iraqis were returning home in floods recently, when it persuaded Syria to expel them, having changed their visa requirements? No, similarly, this would require force, or something more than superficial smiles.
Perhaps we could encourage migrant workers to come here, be paid less than the minimum wage, and serve food to our (under-attack) bus-loads of tourists. To build the houses that the DSD has no money to pay for. To make (Northern) Irish people feel like the bottom rung is below them, and provide a new outlet for our prevalent bigotry, indeed on of our few growth industries.
How about SF become a socialist party and make (Northern) Ireland a place which says no to ultraliberal financial terrorism, that has plenty of roofs to sleep under in any case? Against the wishes of their rulers in London. Baited breath…
How about (Northern) Ireland formed an economic policy antagonistic to London and Dublin? To the US, by that token.
How about we offered tax-cuts to businesses conducting research into new sources of energy, and ways of implementing them? Or indeed paid for this itself. Baited breath…
I am no economist, but I can see that these are crucial issues. That we will leave it to our civil servants to address, then for the Assembly to take credit for their work. That the future is spectacularly miserable, and the only people for whom it is likely to be bright are
a) already rich
b) without seven mortgages
c) foreign corporations
d) the British and Irish governments
e) the South Armagh IRA and Sinn Fein
f) those who move to LondonPosted by on Dec 11, 2007 @ 08:33 PMSammy - house price rises are real and have meaning as:
1) You can borrow against them.
2) You leave real money to your kids.
The first point one of thev drivers of economic activity over past decades in countries of Britain.
Boom in house prices there staggering however.Isn’t it at least partly due to planning restrictions ?Posted by on Dec 11, 2007 @ 08:55 PM
