Time to tackle Northern Ireland's economic decline

Former Taoiseach Garret Fitzgerald, writing in the Irish Times (subs needed), says it’s time for Northern Ireland’s politicians to turn their attentions towards reversing the relative decline of the region between the rest of the Irish Republic and the UK saying now “in some important aspects it is akin to the East German basket case; above all in the debilitating scale of its economic and financial dependence on the larger neighbour to which it is politically linked.”

Fitzgerald points out the first regional estimates for Northern Ireland, made by Prof. Charles Carter for the year 1953, showed that output in Northern Ireland was 27% higher than the Irish Republic and due to financial transfers from Britain (social welfare etc.) living standards were 33% higher.

In the 1960s both regions grew at the same pace of around 4% (70% faster than the British economy).

However, after the subsequent three decades of the troubles, the Republic had come within 3% of the British figure while growth in NI halved to an average of 2% a year. He continues:

“As a result the area became hugely financially dependent on Britain. I am not aware of any study that attempts to explain this development. But it is difficult to believe that the IRA’s campaign of violence had nothing to do with it…

He points out that “much of the manpower and human energy of the area had to be channelled into what became a grossly swollen security industry. And as the public sector grew, the private sector languished.

The more the IRA sought to wreck the infrastructure of Northern Ireland, the more the region lost any chance of being able to gain freedom from the financial dependence that bound it ever more tightly to Britain. Of course, we cannot know how rapidly the Northern economy might have grown under conditions of peace and stability….

…But what is quite certain is that the IRA campaign pushed Northern Ireland further into the British embrace. For any thinking nationalist this was clear lunacy.”

Most interestingly, he says UUP leader David Trimble missed a great opportunity because of what he calls unionism’s “determination to reject non-political links with the Republic” that might in time have helped to restore the North’s economy.

“If I had been David Trimble at the Belfast negotiations in 1998, I would have refused to sign unless the British agreed to ask the EU to permit Northern Ireland to apply corporate tax rates nearer to the low Irish than to the high British level – a request that would have been politically very difficult for other EU governments to refuse.

Another would have been that the Irish government permit Northern Ireland to share fully in and benefit from the highly skilled efforts of the Industrial Development Authority, which is probably the world’s most effective industrial promotion body.

Instead, Trimble’s narrowly political view seems to have led him to seek to avoid any economic differentiation from Britain, however, valuable that might have been for Northern Ireland, and to choose less economically valuable sectors for the North-South co-operation process.”

Fitzgerald argues that as a result “Northern Ireland has a very weak econonmy, which in some important aspects it is akin to the East German basket case; above all in the debilitating scale of its economic and financial dependence on the larger neighbour to which it is politically linked.

In 1953, the North, with 31% of the island’s population, was responsible for 38% of its output. Today, with only a slightly smaller share of population, it accounts for barely 23% of what this island produces.”

He concludes:
“Surely it is more than time for its politicians to turn their attentions to reversing the relative decline of their part of this island.”

  • Henry94

    Garret Fitzgerald is a great guide for economic policy. Find out what he thinks and do the opposite. It worked in the south and it can work in the north too.

  • David Vance

    I agree with Henry94. Economic nonsense from the increasingly detached from reality Fitzgerald. The last thing NI needs is politicians “helping” with the economy. Funny thing about politicos is their rather touching and enduring belief that there is not one problem out there that they can’t solve. Dead wrong, of course!

  • FewsOrange

    David

    It is interesting to see you describe a call for lower taxes as “Economic nonsense”. On ATW you link to numerous right wing websites and you advocate smaller government. If you were consistent you would welcome a call for lower taxes.

    Instead, your narrowly political view seems to have led you to seek to avoid any economic differentiation from Britain, however, valuable that might be for Northern Ireland.

  • Malachi

    The importance of Garret’s argument lies in it being a solid and – I think original – refutation of Provoism.

  • Taoscán

    Garret “it works in practice but will it work in theory?” FitzGerald.

    Bless him, he means well…

  • David Vance

    FewsOrange,

    I advocate small Government; the total privatisation of the NHS; the removal of the dead hand of Government from education; the end of the Welfare State; the embrace of globalisation; the exit of the UK from the EU; for starters. Tell me, is Garrett in agreement?

  • FewsOrange

    DV

    In this article Garrett is neither in agreement nor disagreement with most of the points you mention. In this article the main points he makes are that the public sector in NI is too big and corporate taxes should be lower, both things that you agree with. However because it is “Mr Anglo-Irish Agreement” who is saying them, you feel the need to attack the article as economic nonsense.

  • Henry94

    David Vance

    There isn’t much chance of implementing that agenda in a UK context. The party closest to it would probably be the DUP.

    Once they see of the UUP and make their deal with Sinn Fein they will be faced with a choice. Permament power-sharing with provo pro-leftists in a Labour led UK.

    Or making the agenda you outlined a negotiating position for a new Irish 32-county state.

    The south is some way along your road already

    -small Government;

    One of the smallest tax takes as a % of GNP in Europe.

    – the total privatisation of the NHS;

    Mary Harney is the Minister who is working on that

    – the removal of the dead hand of Government from education;

    Far more private education than Britain.

    – the end of the Welfare State;

    They are cutting entitlements

    – the embrace of globalisation

    Already doing it and reaping the rewards.

    – exit from the EU

    Bringing in the anti-EU Unionists would tip the balance of public opinion against membership.

  • Henry94

    And why stay where you are not wanted.

    According to todays Sunday Times less than a third of British voters want Northern Ireland to stay in the UK according to a Sunday Times/YouGov poll. The online survey of 1,400 electors found 46% favoured a united Ireland, only 30% want to keep Northern Ireland — and 25% don’t care.

  • Davros

    Henry- If people in the ROI were honest and bye-passed a knee-jerk “yes”, I wonder would even 46% of them want us ?

  • IJP

    A fine riposte, Henry!

  • Henry94

    Davros

    It looks like the only knee-jerk the British want to give us is the painful kind. Now we can have direct rule by people who just want to see the back of us or a DUP Sinn Fein coalition sáecula sáeculórum.

    Or should we consider making a deal with parties in the south for the kind of united Ireland that would see unionists in power with like-minded parties from the south and Sinn Fein in opposition and with no real reason left to exist.

    It would be the ultimate political irony. I don’t think unionists will agree with the argument now but it’s something to keep in mind as the future unfolds.

  • objectivist

    ”Henry- If people in the ROI were honest and bye-passed a knee-jerk “yes”, I wonder would even 46% of them want us ? ”

    We really pine after our separated northern brethren.Honest.

  • Davros

    Read my post again Henry and try to bye-pass your own reflex 😉

  • Tim

    David holds some lunatic views such as advocating the complete destruction of state education altogether (to be replaced by a fully privatised system), even at the primary school level.

  • Henry94

    b Davros

    I did read your post. You are countering the evidence that the British don’t want us with a claim that the south only pretends to. I’m optimistic. I believe we can convince them when the time comes of the merits of a united Ireland if we agree ourselves what we want from it.

    There is another point I’d ike to make before I turn in. The evangelical Protestant movement world wide is far less hostile to Rome than it used to be. The late Pope John Paul was admired and respected by them and I believe Benedict will follow the same path.

    This article
    is an example. I think that view will have an influence here in reducing tension and hostility in the long run.

    While this won’t turn unionists into nationalists it may help us all come to a clearer understanding of what we want from a state and what constitutional configuration best meets that need.

  • Davros

    you are countering the evidence that the British don’t want us with a claim that the south only pretends to

    I’m not countering anything Henry – there’s that reflex mate. Do the people of the 26 really want us ? If we start from the position that SF is the only mainstream party in the Republic that is enthusiastic about Unification A.S.A.P, then it looks a long way off 46%. The impression I get is that the desire for more would be a combination of sentiment and “sometime in the future , hopefully not in my lifetime”

  • bill

    ‘A lifetime’

    Will be decided by the electorate,if and when they vote for Irish unity

  • aquifer

    “As a result the area became hugely financially dependent on Britain. I am not aware of any study that attempts to explain this development. But it is difficult to believe that the IRA’s campaign of violence had nothing to do with it…”

    Garret is, well, on the money.

    Inward and much internal investment stopped and many skilled workers left, many joined the RUC!
    Jobs in dud firms were maintained despite the cost in postponed restructuring.

    The same 20% corporation tax rate as ROI, reskilling, and a crackdown on gangsterism could reflate the local economy very quickly though, if it were not for dud British and Irish Nationalist politics, with their illusory promise of more jobs for one side.

  • Henry94

    Davros

    I’m reminded of the Monty Python sketch where the guy is claiming not to be arguing in the middle of the argument. Their version was funnier.

  • peter

    Oh dear, two words for Garett, cocoa -cola,

  • Davros

    OK Henry, judging by your reaction, I guess you think I’m on the right track, but you cannot bring yourself to admit that people in the ROI don’t want us – in the same way as head in the sand Unionists don’t want to face upto the fact that many in GB don’t want us 🙂

  • IJP

    To try to make the point I think Davros is making from another angle: the figure of support for maintenance of the Union in GB is so low precisely because of the instability in NI.

    If NI were stable and prosperous (which should be what we’re all aiming for), I’d say support for the Union in GB would be much higher.

    Likewise in the Republic, the sentiment is there but not while the nonsense and instability continues (the ‘not in my lifetime’ line).

    In other words, attitudes in GB and the Republic are not much different.

  • IJP

    Peter

    Even a stopped clock’s right twice a day.

    If you’re suggesting the North’s economy is even remotely competitive or comparable with the Republic’s, it’s time to come out from the stone age.

  • Davros

    That’s close enough Ian. It’s not a question of point scoring aboyut who wants us least . I’m not trying to play the usual zero sum game.

  • spirit-level

    One other point to make is:
    The Irish haven’t had money for 800 years, now they’re rolling in it the “airport chat” is not about reunification, but about house prices and “making a fortune”.
    As a failed entity who wants to touch it with the proverbial barge-pole!

  • Tom Griffin

    There was an interesting story on this a week ago in the Sunday Times

    The state’s share of the economy in London and the southeast, widely regarded as the most dynamic region of the country, is similar to that of America, Ireland and Australia — countries that have generally grown more quickly than Britain. By contrast, the state’s share in many other regions is higher than in slow-growing European Union economies.

    It’s interesting that the article makes the same Soviet comparison as Fitzgerald.

    In both Scotland and Wales, the state’s share of the economy is almost as high as in Northern Ireland.

    This may be becoming more of a political issue in England because of the continued role of Scottish MPs in deciding policies in England.

    Two other developments may affect this: Whether Labour can keep its majority in England, and
    Whether Gordon Brown becomes Prime Minister.

  • George

    Tom,
    very interesting article indeed. Another figure that is relevant here is that 82% of the jobs created in the UK in 2004 were in the public sector, which does not bode well for the future of the UK economy as the current level of spending can’t continue, especially if there aren’t enough wealth creating jobs being delivered by the British economy.

  • Henry94

    IJP

    If NI were stable and prosperous (which should be what we’re all aiming for), I’d say support for the Union in GB would be much higher.

    Stability of a sort may be possible for us to achieve with the Agreement but prosperity will not necessarily follow and the policiy choices which affect it are still made in London. Our input into such policies is zero.

    Your point is like someone on the dole thinking the girl in the dole office might fancy them if they had a job.

    Tom and George make good points.

  • barney

    Let’s see if I understand this correctly.

    1. Only Britain can afford to keep us while our economy is crap.
    2. We’d have no reason to join the 26 if our economies were equal.
    3. There would a disincentive to join the 26 if the 6 were doing better at the time.

    So, for Unionists, there can never be an economic justification for joining the 26.

    Is that about right?

  • Billy Pilgrim

    Barney

    You’re thinking like a colonial, seeing this issue as simply which imperial massa can buy the nicest toys.

    If you were able to think like an independent, they you’d perhaps understand that the Republic has achieved economic success because it is independent, and was therefore able to make its own decisions and pursue its own interests. Conversely, we in the north – who have yet to join the rest of Ireland in independence – have a failing economy BECAUSE of the union and partition, BECAUSE we are dependent and because of all the lethargy, instability and social poison that this pathetic state of affairs brings.

    So the economic incentive for unionists is: if you want to live in a functioning economy (and a functioning democracy to boot) then vote for unity. Unity and independence are the MEANS by which economic normalisation and ultimately, wealth-creating prosperity will become possible. Union means the dole queue.

  • IJP

    prosperity will not necessarily follow and the policiy choices which affect it are still made in London. Our input into such policies is zero.

    Firstly, how did you know about the girl in Bangor dole office five years ago…? 🙂

    Secondly, your argument sounds like the perfect argument for an independent NI to me – why not have it all? In fact, why not an independent Fews?!

    Thirdly, your above statement is plain wrong. With functioning devolution and sending MPs and MEPs to London and Brussels/Strasbourg who were interested in real politics, NI’s influence would be similar to Scotland’s. And since a Scottish-educated fella is current incumbent of the highest office in the trillion-dollar economy, and is about to be replaced by a ‘full’ Scot, Scotland doesn’t do too badly in terms of influence!

    NI’s constitutional position is being abused by the tribalists as an excuse for continued instability. That is unacceptable. Our segregation and divisions are the problem, not our constitutional position (even if other arrangements could indeed be preferable).

  • BIlly Pilgrim

    IJP

    “Our segregation and divisions are the problem, not our constitutional position (even if other arrangements could indeed be preferable).”

    I’m not a doctor, but I understand that they are trained to treat the causes of disease, not the symptoms. Your point above sounds reasonable, but would you accept that it could certainly be perceived as a shout for the status quo?

    (A status quo, the undesirability of which you ostensibly acknowledge?)

  • biffo

    Firstly, let’s admit that nobody actually understands how the economy works. If we did we’d all be mega-rich.

    Nobody really seems to know why the republic’s economy is doing well.

    I’ve heard that it’s based on housebuilding and rising property prices and consequently it also very uncompetitive and is becoming increasingly vulnerable to a sharp reversal of fortune.

  • George

    IJP,
    firstly, you seem to be implying that Brown is somehow in a position to help Scotland or has them in mind when making decisions. Either that or you are arguing that a little bit of prestige should keep the Scots happy.

    Brown is not there as a self-determining Scot, he is there as Chancellor of the entire British economy.

    Brown is in the control of the purse strings of this trillion pound economy and Edinburgh has a fledgling devolved parliament, dependent on handouts from London and therefore hesitant to take the tough economic decisions.

    So what if Brown is in Number 11 and so what for Scotland if there is a devolved parliament if all he and it are there for is to tweak overall UK policies?

    This still hasn’t helped stem the apparently relentless decline in the Scottish economy, which has underperformed compared to the rest of the UK for forty years now.

    It hasn’t stopped the drain of the brightest towards London, lowered the level of dependancy on the public sector, stemmed the decline in the country’s overall population, ended it being the country with the lowest life expectancy in the OECD etc.

    Scottish GDP in 2004? 1.9%
    Overall UK GDP in 2004? 3.1%

    Scottish productivity has also dropped 5% since 1996 in comparison with the rest of the UK.

    NI is no different. The wealth gap with the rest of the UK is the same as in 1997, 79% of average GDP and we all know about the public sector.

    If Brown was to implement policies solely for the benefit of Scotland, then you might find that Scotland’s situation would be a bit rosier.

    Personally, if I was Scottish I’d want him in Scotland delivering for Scotland rather than in London, working policies that are perpetuating the inequality.

  • Henry94

    IJP

    First of all, good luck in the election. We may not agree much but you would make a good representative for those you do agree with. I hope you get in.

    With functioning devolution and sending MPs and MEPs to London and Brussels/Strasbourg who were interested in real politics

    I think this is the problem with your outlook. You ignore the fact that more and more people don’t want to send representatives to London and those who do tend to send the DUP. This sectarian state will continue to produce sectarian politics. It was designed to do so and it continues to work as designed.

    We need a new design and there are only three options that have support. Independence is not one of them.

    We can be ruled from London excluded from control of our affairs. We can have a Sinn Fein-DUP coalition. Or we can be part of a self-governing republic where people from the north actually get to sit in the real government.

  • JD

    Wasn’t there a 1999 poll which found that 86% of those in the Republic of Ireland supported a united Ireland?

  • Henry94

    JD

    I think Davros has a “false concsciousness” theory on that.