Northern Ireland sitting on its public sector cushion, isn’t immune unfortunately…

The financial crisis has exposed a big area of weakness in Northern Ireland’s post-Troubles’ resources-strapped journalism (except for the BBC)– economic coverage, unless it’s about business handouts or purely about the impact on people’s pockets. This mean fears and anxieties can be inflated and people can be caught unprepared. Less scrappy reporting and more consistent context and background are badly needed but I see little prospect of it happening. Somebody on the Irish Times business newsdesk obviously felt the need to inquire how the North was faring and commissioned this pull together of recent specialist comment. Reported by the Irish News, a fortnight ago, the piece reports Michael Smyth of the University of Ulster’s comments that:

“Northern Ireland is in much better economic shape than it realises but is in danger of talking itself into a recession”. As we’ve noted before, it has “the benefit of a public-sector-driven economy to cushion it from the worst effects of the credit crunch and global slowdown. New research shows British taxpayers have subsidised public-sector spending in the North by an estimated £57 billion (€71.8 billion) since 1985/1986. The research shows that, in terms of the amount of money allocated by the UK treasury, public spending per head in the North is £2,254 higher than in England.” Smyth warns that public expenditure growth will slow in Northern Ireland over the next three years. He believes one of the biggest impacts on consumer confidence has been the “unremitting media coverage of recent economic turmoil”. Smyth is highly critical of some of the media messages.

“Comparisons with the 1980-1983 deep recession or the Great Depression of the 1930s have been made in a very irresponsible manner. ‘If you say it loud enough and often enough they will believe you’ was one of Mrs Thatcher’s favourite sayings,” he says.

However another report isn’t so sanguine or as keen to shoot the messenger.

Ulster Bank Northern Ireland PMI report for August produced further evidence that economic conditions were continuing to deteriorate. Richard Ramsey, Northern Ireland economist with Ulster Bank, said the number of new orders fell for a ninth consecutive month during August. He said there was a particularly sharp drop in the level of new orders recorded in the manufacturing, construction and retail sectors.

So the nationalisation of Bradford and Bingley hasn’t stopped the rot., even though Peston says it’s a good deal for borrowers, savers and the taxpayer. The stock market, waiting for the US deal to come through, isn’t impressed with little bits of European sticking plaster and the lending freeze continues. On the contrary as the Economist reports “The contagion is spreading to mainland Europe and everyone’s asking: who’s next? (Answer, the Fortis group). “Bradford & Bingley’s problems, in contrast, are largely homegrown and raise the worrying possibility that the international banking system will face a second wave of losses as housing markets and economies wilt around the world….Its failure sounds a warning for large mortgage lenders and for regulators in countries such as Spain and Ireland, where housing bubbles have also been pricked.” In Dublin, among the MSM, the Irish Independent is shrillest, leading on the prospects of massive budget cuts and following up with a reminder of contingency plans for a possible bank nationalisation.

One practical piece of advice for B&B investors is worth repeating.

“The Government has previously given a guarantee that the first £35,000 of savings held by customers in any bank or building society would be reimbursed in the event of any institution collapsing or running into financial difficulty. The only potential problem for Bradford & Bingley savers is for those who already have an account with one of Santander’s existing British operations and who, after today’s takeover, will now have more than £35,000 deposited. Financial experts recommend that they shop around and find another bank to spread their savings – although with less choice now on the high street this is becoming harder to achieve.”

  • Glencoppagagh

    The local papers just don’t have people capable of analysing these matters properly or perhaps even reporting them. People would be better off reading the national press.
    In any case think people here are fairly sanguine about it all. So many live off the public sector and don’t need to worry about their livelihood. They’re probably fretting a bit about property prices but only the relatively small numbers in negative equity are suffering.
    The biggest problem facing NI is energy costs which are quite unrelated to upheavals in the fianncial markets except to the extent that energy markets may be distorted by speculative money fleeing financial assets.

  • DC

    Energy costs are affecting the ability of businesses here to remain competitive in the supply side of the slowing British economy. Proof that more effort should be made towards all-Ireland business networking.

    There is neither a will for local papers to press the agenda for change by that missing analysis but there is neither the will for a political debate on it. Perhaps proof too that the politicians elected are not responsible enough to cede to some cultural confidence building measures as a means to pull off into the more significant matters affecting daily lives. Beside cultural state-crafting has less impact than market-states, or market region-states, at least impact in terms of putting more cash in people’s pockets via better jobs and training.

    It’s a hard act to do given where unionists are coming from, but in order to improve the policy levers available to Stormont so as to be better placed to counteract specific market-led changes MLAs must get it together and bed down devolution and effect the most change with what is available.

    Max out the powers that be to prove competence to gain more.

    I have my doubts it is possible at local ethno-political games level. Once again I’m left thinking whether a bi-national supra-regional level of governance might be better placed to work up better approaches to invigorate an all-Ireland and cross-island economy.

    Local politics can be too local to take the difficult decisions, arguably some Thatcherite moves are required as per the Republic in the 80s. And there’s no chance of our lot doing that.

    The ‘leaders of Ulster’/NI can’t even construct a narrative to convince change towards accepting policing powers even though peace is all but one ministry won over.

  • Greenflag

    DC,

    ‘Energy costs are affecting the ability of businesses here to remain competitive’

    Also a major factor is the cost side of the ‘public sector’ albatross (70% of the economy ) which is tightly wrapped around the neck of virtually every family in NI.

    The Germans are now following the French and British and are lookig at new nuclear power stations as the most effective shorter term option to avoid ever further dependence on diminishing oil reserves .

    Ireland will also have to reverse it’s ‘nuclear power’ is a bad word naivety if we are all not to return to the donkey and cart economy of the mid 19th century . Perhaps this is an area where both the NI and Republic’s administrations could cooperate to each other’s advantage ?

  • niall

    Glencoppagh,

    The coverage of this crisis is terrible everywhere as the press clearly has a vested interest in talking matters up as well as the difficulty you state, that they basically don’t know what the hell is going on.

    I recall watching Paxman last year in a trading room in the city doing a piece on the knowledge economy i think and appearing lost as he shook his head and said words to the effect of “yeah but how do you make money, what do you sell”.

    Things are going to be tough but it should be seen as a time of opportunity for NI.

    It’s time to talk up the economy in the North for a change. We do certain things very well here.

    We have an engineering, technology and scientific industry which operates under the radar.

    We have a much better education standard than in the south/england. We are a very capable people of global outlook who understand something of value for money and service delivery which can be our competitive advantage over the south.

    In the Celtic Tiger which is rightly a lauded economic evolution we witnesses what is being described above by Thatcher, people kept talking up Irelands good points to an extent that they could have half truths accepted internationally as fact.

    It’s a good education system and it has had 10 years or so were it was in real tandem with the economies needs but you take schools from Tyrone, Fermanagh, Derry or Armagh and compare like with like in provincial places down south and you’ll find the greater potential is North of the Border.

    THANKFULLY the property boom and bust here in NI has been a 36 month trip as opposed to the southern and English 10 year journey to vast numbers of people FEELING they are in economic peril.

    Lets be realistic, tough times ahead but ultimately if we look at it properly and ignore our dithering politicians and avoid being totally distracted by our sectarian underclass we could make huge social and economic progress here despite the downturn.

  • barnshee

    “Ireland will also have to reverse it’s ‘nuclear power’ is a bad word naivety if we are all not to return to the donkey and cart economy of the mid 19th century . Perhaps this is an area where both the NI and Republic’s administrations could cooperate to each other’s advantage ?”

    Let me see how can I put– this nope there is no other way of saying it.c Fuck off back to your donkey and cart.
    The Republic has creamed off tens of millions in excise duty paid on Fuel subsequently smuggled into NI. Use that

  • Engineer

    “We have an engineering, technology and scientific industry which operates under the radar. ”

    Jobs in these sectors pay woefully in the North. I know – like many people who would like to return to NI, I’d have to take a 50% pay cut to do so. And houses in NI are about 100% more expensive than where I currently live. You do the math.

    “THANKFULLY the property boom and bust here in NI has been a 36 month trip”

    And it has about 2 more years of bust to go, followed by years of stagnation.

  • niall

    Engineer

    how about this then Engineer, come home and start a business, avail of the lower wages for your employees while getting your business up and running then help to get the wages up to speed?

    we all need to avoid doing the norn iron thing complaining about the injustice of it all?

    As for the houses i think they were overvalued by at least 100%, we are seeing 40% from peak declines already and they will definitely fall more but i think this thing is unravelling faster than 2 years as you suggest. Stagnation for years definitely but out west we could have all out bust by next may.