The financial crisis has exposed a big area of weakness in Northern Irelands post-Troubles resources-strapped journalism (except for the BBC) economic coverage, unless its about business handouts or purely about the impact on peoples 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 Ulsters comments that:
Northern Ireland is in much better economic shape than it realises but is in danger of talking itself into a recession. As weve 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 isnt 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 hasnt stopped the rot., even though Peston says its a good deal for borrowers, savers and the taxpayer. The stock market, waiting for the US deal to come through, isnt 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 & Bingleys 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.