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.

  • Conor

    yes, have you now seen that the…yes, wouldnt ye know, the DUP have called for his resignation just because he said the economy wasnt sustainable in the long term! have you ever heard the likes of it? imagine taking great offence to that.

  • John East Belfast

    “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,”

    what does this mean in actual practice. It just shows how vacuous this man’s head is and how little he knows about economics or even the business climate north or south.

    Business already co-operates fully – its called trade and with the EU it is easier than ever.

    The biggest barriers to the kind of all Ireland economy he talks (I assume) about are the fact that we have differing, and most importantly, competitive fiscal regimes and have different currencies – infact we are different countries !

    Therefore unless he has plans to make NI a part of the EURO and differentiate NI taxes from the rest of the UK then all this is just rhetoric.

    Poor journalism as well because if he had said something like this to Jeremy Paxman he would have been nailed on what it actually meant.

  • Padraig

    I was curious about Pter’s comments. Could he say things like this publically without Cabinet approval? If he did have such approval is it possible he is kite flying to see how the idea of such movement would go down?

  • Conor

    ‘different country’ eh? ESB, the Irish power giant has recently set up in Coolkeeragh, Derry. Power sharing? i thought the DUP would have been furious!

  • Brian Boru

    I agree. Donegal for example has 17% unemployment compared to 4% in the South as a whole, and border regions of the Six Counties are also worse affected unemployment wise compared to NI as a whole. Closer trade links are needed to combat this. Partition has damaged the economies of these areas. In particular, there is a need to re-open rail-links between North and South which were closed down by the ever-paranoid Lord Craigavon.

  • Congal Claen

    Hi Brian,

    “Partition has damaged the economies”

    Agreed. Get the RoI to rejoin the UK and we’ll all be much better off in the long term. “Ourselves alone” attitudes will inevitably return us to the mass emigration of the 50s…

  • Henry94

    The subtext could not be clearer. The British want rid.

  • fair_deal

    Brian Boru

    “Partition has damaged the economies of these areas.”

    Of course the trade boycotts of Northern Ireland companies organised by southern nationalism played no role whatsoever in ripping the southern border counties from their natural economic hinterland nor did a sustained terrorist campaign have any impact either. Its all lord Craigavon’s fault, not.

    17% unemployment in Donegal? So its northern isolation from the seat of government has left its needs being ignored? Hmmm.

  • 9countyprovence

    I remember reading a book a while back on the history of Ireland in the 20th century. In it it describes a meeting of U.S. investors and the U.S. government, around 94-96 (not sure of the exact year), in which they discussed invesment in Ireland. They were counting the whole island as one economic zone. The Unionists at the time were enraged at this and battled hard to have this changed. Of course, this meant that nearly all the investment went South. This was the time of heavy foregin investment in the country and the boom was in full swing. So you have to imagine, how much investment did NI lose out on? Why would their attitude be any different now?

    As we can see from certain posts above, some Unionists are still waiting for a slipback into pre-boom economic stagnation. By the way, ‘ourselves alone’ is not the general consensus amoung Southerners. Don’t get SF mixed up with everyone else. It is clear that this is not the ROI’s attitude with how we carry ourselves in Europe and in the higher echolans of the E.U. Keep dreaming though if it makes you feel better.

  • George

    Fair_Deal,
    let’s talk about living memory.

    It was unionists running around with “Boycott Eire goods” in the 1980s. I have never heard a southern party advocate boycotting northern goods.

    Today, in 2005, 25% of NI goods are exported south. Some boycott. 2% of the Republic’s goods go north. Do unionists shop in Dunnes Stores?

    It isn’t actions from 80 years ago which are stifling development in the border counties, it’s the border itself.

    As I wrote on another thread, the Republic has got 100 times more foreign investment in the last 10 years than Northern Ireland.

    It may not be isolationist but by its very policies it is leaving itself isolated.

  • mnob

    If NIs economy is unsustainable then so is Scotlands, Wales and Northern England. OK so the figures arent as extreme as NIs with maybe 50% of the population dependent on the public sector but they are still “unsustainable”
    (there’s no such thing as not quite as unsustainable).

    What Hain is saying is that because NIs economy is unsustainable then instead of linking it with the economy of say … ooohhh I dont know … a medium sized Europan country (e.g. the UK) or even Europe in general (by adopting a single currency harmonised interest rates etc etc) we should link it with a small sized European country (e.g. ROI). This mdoesn’t really make sense to me.

  • Ringo

    BB

    I agree. Donegal for example has 17% unemployment compared to 4% in the South as a whole

    That is false, but unfortunately it is typical of the way you play fast and loose with facts in your posts. In this case you’re comparing two completely different statistics.

    If you’re using the 4% as the base, the Donegal figure is 8%.

    If you’re using the 17% the national figure is about 9%.

    One is the live register – the other is total unemployment.

  • Brian Boru

    “17% unemployment in Donegal? So its northern isolation from the seat of government has left its needs being ignored? Hmmm.”

    LOL That doesn’t wash considering low unemployment in Cork for example being further away from Dublin than Belfast is.

    “Agreed. Get the RoI to rejoin the UK and we’ll all be much better off in the long term. “Ourselves alone” attitudes will inevitably return us to the mass emigration of the 50s… ”

    LOL

  • TreeHouse

    mnob,
    If NIs economy is unsustainable then so is Scotlands, Wales and Northern England. OK so the figures arent as extreme as NIs with maybe 50% of the population dependent on the public sector but they are still “unsustainable”
    (there’s no such thing as not quite as unsustainable).

    Thats hardly a valid point – For a start Scotland, Wales and N. England all have far larger populations and all have a land connection with each other. In the North one of our largest trading partners (if not our largest) shares the same island and we have civil servants / politicians who can’t even grasp the economic sense behind a united ireland economically. I work for a fairly large local retailer – when we wanted to expand outside NI we looked south, not to england or scotland but dublin, simply because logistically and for management reasons its easier to drive down the road than get a plane or boat. That said like so many cross border retailers our expansion south is shackled by red tape and additional costs that make running a company in both jurisdictions very expensive. The only solution for this is for our politicians to take positive action and help make it easier for northern companies to do business in the south – this will create more local wealth and help lessen our dependance on the public sector.
    Regarding Peter Hain he’s only saying what a lot of business’ are thinkin – Unionists can try and prevent us from having cross border relationships all they like but they also have bills to pay and ecomonics will eventually dictate that unification makes sense.

  • If NIs economy is unsustainable then so is Scotlands, Wales and Northern England.

    That’s true up to a point, but at least Scotland and Wales have functioning devolved governments, which are beginning to show signs of understanding the problem.
    I suspect that Gordon Brown’s ambitions will dictate a shift in public spending in favour of England. (Notice his photo-op for England’s World Cup bid today.)
    You could argue that Hain was speaking to his audience, but his actions do sugggest he has a brief to squeeze the subvention as much as possible.

  • Congal Claen

    Hi Brian,

    “LOL”

    Glad your laughing. However, an economy built on foreign investment is very susceptible to relocation to lower cost bases or home markets. The RoI’s GNP is about 25% down on the GDP figure.

    I don’t want to sound like a complete killjoy so enjoy the good times. But remember economics is cyclic, so prepare for the bad…

  • fair_deal

    George
    1. Economic damage can last a long time especially those areas on the economic periphery. The border need not have become a barrier to trade but the economic boycotts adopted by the south helped make it so.
    2. This is not the only example of southern polticial attitudes having a destruction approach to economic well being. It was the reckless issuing of fishing licences by southern authorities that almost destroyed Lough Foyle as a fishery. This mismanagement led to the establishment of the Foyle Fisheries Commission and the fishery took years to recover.
    3. Also the economic isolationist policies pursued by southern governments especially in the 1930’s contributed to severing the economic relationship with Northern Ireland as well as the rest of the world. This contributed to economic problems well into the 1950’s.
    4. The economic damage the RoI suffered in WWII as a partial consequence of its neutrality and its subsequent exclusion from post-war aid.
    5. There were calls for boycotts of British goods in 1969.
    6. Where in my comments did I object to trade with the RoI? I simply pointed out that the deterioriation in the economic relationship was due to the choices of the RoI as much if not more than the actions of the NI government.
    7. The terrorist campaign was within living memory hardly an investment incentive.

  • Brian Boru

    Fair_Deal, do you accept that Craigavon closing down all the railways to the South except Belfast-Dublin contributed to the problem, and do you support re-opening them.

  • fair_deal

    BB

    The closure of the railways is probably like chicken and egg – how much did the boycotts and economic isolationism cause a decline in traffic that made them unviable or the closure lead to a decline? The closures probably made a deteriorated situation worse and hampered the ease with which ties could be restored.

    There is a significant question mark over the economic viability of the existing rail network in Northern Ireland so I would need some convincing on the value of extending the existing network. However I am personally sympathetic to improving the road infrastruture in the West of NI and with the Border counties. The condition of the road network in both is poor and is the basic building block of any modern economy.

  • jim

    Start of the exit strategy

  • George

    Congal,
    you are a bit behind the times. Understandable considering the pace of change in Ireland. The Atlas GNI for 2004 (UK’s favoured method which strips out the foreign expatriation in GDP figures) shows Ireland now ahead of the UK at number 12 in the world at $34,280 per capita. UK is at 13 with $33,940. Northern Ireland is at 79% of UK GNI (static since 1997) while the gap between Ireland and the UK is predicted to continue to grow at least until 2020.

    I don’t want to sound like a complete killjoy but the times are only going to get worse for Northern Ireland. The Republic will definitely chug along until 2007. After that, we’ll see but at current rates it will take Northern Ireland at least a thousand years to catch up.

    Fair_Deal,
    the only things on your list I remember are (as a child) the fishing licence issue and (as an adult) the end of the terror campaign. The majority of Irish people are younger than me. 1969 is not in living memory for the majority of Irish people. The majority of Irish people weren’t on this earth. The majority of Irish people never heard of the Specials (the band that is). Shocking but true.

    I spoke of investment in the last decade in the quote I gave. I fully accept the “Troubles” stifled growth but, more importantly, the actions of all parties in NI in the last decade have stifled growth.

    There was a glorious opportunity to be grasped, “the age of the Irish” when we would get “in our stride” as President McAleese said in 1997. She was right. But instead of taking advantage, people like Trimble threw out the insults and Paisley, to this day, refuses to shake the Taoiseach’s hand.

    That goes down well with investors as evidenced by nobody investing in Northern Ireland. At least Paisley’s wising up slightly and was down today being a little less abusive and a little less superior.

    As I said, the majority of southerners have no experience of calls to boycott northern goods. As a child I was on the £5 (punt) bus to Belfast to go to Argos when we didn’t have it. Toasters for the price of a pint.

    As a teenager up for the Royal Dutch at less than 30p a can. Some boycott. That’s my generation’s “southern” Irish experience of Northern Ireland – economically that is.

    When you talk of the 1930s you talk as if the Republic was the place with the economic might, squeezing the poor north. Jaysus, we couldn’t butter a sandwich while over the border they weren’t only growing the wheat, they were baking the bread. Give me a break.

    Everyone south of the border was cut adrift (and vice versa but it wasn’t one-sided) and northern unionists wallowed in their economic superiority. Some wallow to this day.

    Northern Ireland didn’t need us and saw no profit in us but now it does. The problem is that nobody has told the unionist electorate yet. The business community know it only too well and are happily working away.

    Today, the Republic doesn’t need Northern Ireland but business is business.

  • irishman

    Very good post, George.

    We are entering an age when I truly believe economic forces- in the form of a new southern-inspired entrepreneurial culture, will take up the traditional objective of Irish nationalism, albeit unconsciously.

    In terms of the public sector, anyone truly interested in seeing counties Donegal, Tyrone and Derry developed will spearhead a campaign for strategic regional transport planning transcending the border- a direct motorway to Dublin should be the main goal. Hospital services will likely follow – the Cancer treatment initiative announced this week will be only the beginning.

  • Brian Boru

    I don’t remember ever being called on by our politicians to boycott northern goods. The Belfast boycott was in the War of Independence 1919-21, so I think you are stuck in a timewarp there , Fair_Deal.

  • Dualta

    I agree with Henry when he says that the British establishment wants rid of us. I can’t help suspecting that the plan for eventual disengagement is already in action.

  • Henry Fitzpatrick

    Oh please – ‘We are entering an age when I truly believe economic forces- in the form of a new southern-inspired entrepreneurial culture, will take up the traditional objective of Irish nationalism, albeit unconsciously’. Why is that so many nationalists are prone to fantasy when it comes to matters economic?

    I suppose the economic determinism/inevitability crap simply went too deep when everyone was a lip-service Marxist, and now that everyone mouths Tiger platitudes they can equally easily say, exactly the opposite fiscal philosophy to the one we used to believe in (capitalism, as compared to Socialism cum Catholic social doctrine) will *still* – would you credit it? – lead to the end result we have always wanted.

    Seriously though, boys and girls, if a welathir north didn’t lead to the mass in the south wanting to rejoin the UK, why do you imagine a ‘wealthier south’ (by some measurements only, and certainly not for the welfare classes!) will produce a tipping point amongst the northern mob? The subtext here’s not too hard to spot: southern nationalists were far too high-minded ever to be sawyed in the first 80 years after partitition by filthy lucre, but northern jaffas . . . well obviously one whiff of a Euro and they’ll roll on their back and stop pretending to be British. Dream on children.

  • fair_deal

    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.

  • IJP

    Far 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…

  • lib2016

    “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.

  • George

    Fair_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.

  • John East Belfast

    George

    “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

  • George

    John 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.

  • John East Belfast

    George

    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

  • George

    John,
    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.

  • finn69

    lots 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

  • Comrade Stalin

    The 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 ?

  • Brian Boru

    “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.

  • fair_deal

    George

    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?

  • fair_deal

    Brian 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

  • Brian Boru

    “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.

  • Brian Boru

    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.

  • John East Belfast

    Brian

    “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 ago

    Currency
    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.

  • George

    Fair_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.

  • George

    But 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.

  • barnshee

    “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.

  • Comrade Stalin

    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.

    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.

  • barnshee

    CS

    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 ye

  • George

    Barnshee,
    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%.

  • Comrade Stalin (Commissar for Software Engineering

    The 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.

  • Henry94

    Comrade 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.

  • Comrade Stalin (Commissar for Software Engineering

    They 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.

  • John East Belfast

    It should be pointed out that low corporate taxes are only beneficial for a Foreign Owned Company if they leave the post tax profits in the jurisdiction of the low tax. As soon as the company repatriates such post tax profits then it is clobbered at its home rate thus destroying any benefit.

    However this was ingenious by the ROI Govt as what it meant was that foreign owned manufacturers left the money in the ROI to finance the R&D jobs as well.
    Thus the Republic got the blue collar workers as well as the white collar scientific jobs.

    You have to take your hat off to them.

    However I can see why the Republic did this and it could be argued that any of the UK regions (if they were separate countries) would probably follow suit.

    However a Govt has to raise tax somehow so if Corporates are not paying their fair share (and at 13.5% they are not in my opinion) then others will.
    VAT is 21% against 17.5% in the UK, Higher Rate income Tax (I think 42%) kicks in much earlier than the UK 40% and Stamp Duty is horrendous (from memory rising to as high as 9% ?.

    All of this can depress the value of take home pay and thus create wage inflation pressures. Once again the Republic has avoided this and I can only assume it is in large part due to recent immigration there ?

    Anyway if NI is going to enjoy other UK benefits then it has to pay its whack.

    I dont think you can play around with ‘Federal Rates’ – it would create crazy distortions and anomolies.

    However I think you can have tax breaks – eg Post Agreement we had 100% accelerated Capital Allowances and although this did not mean less tax it did improve cash flow.
    I think this scheme could be extended and enhanced by say increasing such Allowances by 50% for NI Fixed asset investment as is already done for R&D expenditure.

    Therefore Tax Breaks that either defer or reduce ultimate tax paid should be targeted at areas of need.

    The whole tourist industry in NI is way under developed for instance.

    ie NI plc needs to recognise where it is weak and then regional NI Govt assistance via Tax breaks and targetted assistance should be made.

    There is no case, IMHO, for messing about with ‘Federal’ Tax Rates.

    There are no quick fixes to improving the fortunes of an economy which has emerged from 30 years of unrest and terrorism and continues to suffer from the aftershock of old industry decline.

    However many of us are committed to doing it and if Hain has neither the stomach, imagination nor inclination then he should go

  • slug

    John

    I think that simply by reducing government employment a bit is good for the private sector because it releases people who would otherwise go to the public sector. I am sceptical that the government will be able to make big reductions in spending in NI much of which is simply because NI is a poorer region but as a taxpayer I will be grateful if it can cut out what waste occurs through duplication and unnecessary bureaucracy.

  • John East Belfast

    slug

    I agree

    The size of the Public Sector safety net chokes the private sector of talent and removes the need for more people to take the necessary risks to move the economy along.

    However I noticed in the paper tonight the public sector unions are already sabre rattling