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.”