South is a proxy not substitute for NI’s own market penetration…

OUr politicians having recently cleared the burden of having to seek renewed democratic mandates for a further three years have a breathing space to make something happen in the economic space. The financial conference next month is thought to be much smaller than that originally planned (credit crunch is taking up most of the US’s intellectual slack just now), but it could be seen as an opportunity to begin conversations that might lead to some important new relationships. But before anyone gets carried away, economist John Bradley, writing in last Friday’s Irish Times brings some very useful thoughts (subs needed) to bare:

In the South, faced by crisis situations, we have taken dramatic steps when necessary. After 1958 we abandoned tariff protection and embraced the global economy. In the middle of the 1980s we slashed public expenditure and designed social partnership institutions that permitted a radical re-orientation of the economy towards renewed growth.

The problem in the North is that there is no comparable sense of economic crisis. While Northern economic circumstances are not ideal, neither are they all that bad. The “do nothing” option would perpetuate massive dependency on the British exchequer, but would also guarantee a standard of living that is still – surprisingly – probably higher than enjoyed here in the South. As we in the South face into the threat of global recession, such automatic fiscal support is enviable!

What would Northern policy makers have to do to put their economy on a growth path out of dependency? How might they position the post-conflict Northern economy to regenerate the kind of economic resurgence that made early 20th century Belfast synonymous with global dynamism and entrepreneurship?

First, they must abandon the futile demand for fiscal autonomy unless it is in the context of a referendum permitting some kind of federal settlement within which such radical policy actions could be contemplated. Scotland is more likely to blaze the trail here.

Second, they must address the bloated Northern civil service and its effects on private sector risk-taking and innovation.

Third, they should recognise that as a region of the UK, they need to seek out synergies within the UK, using present or new UK policy instruments, combined with a radical mobilisation of the resources of local civil society. If the North is not an attractive place for British firms, it will be unattractive to foreign firms.

Finally, they must recognise that the Southern economy, even in its earlier Tigerish phase, is merely a proxy for the kind of external markets that Northern firms need to penetrate and emulate, and not a substitute for them. Ironically, the unionist parties appear to have a better understanding of this reality than the two nationalist parties, who place too much faith in cross-Border co-operation.

Our role in the South, as good neighbours, is to assist where such assistance is welcomed. But a lot needs to change north of the Border if the economy is to escape its semi-permanent state of dependency.