Mixed messages on future of NI economy

An important difference of emphasis is worth noting between First Minister Peter Robinson addressing the Institute of Irish Bankers and Philip McDonagh of PWC as reported in the Irish News at the NI Economic Conference. Mr Robinson while recognising “real difficulties,” tended to look backwards at old (relative) successes and look ahead on the (equally relative) bright side for future prospects.

Robinson: “If we were to listen to some in the media we might have expected to come here tonight to be greeted by a scene similar to that on the deck of the Titanic with the band playing Nearer, My God, to Thee…. As a former Finance Minister I have learned to be cautious about what economists tell me. I am reminded that there are some economists who have predicted six of the last two recessions”…
McDonagh: “… rising energy and food costs and the ongoing credit squeeze were creating conditions for the “perfect storm”, which would change the economic landscape and pose new challenges for the region.”

On the key areas of housing and construction:

Robinson; “What we are looking at is a significant structural realignment in our housing market. Having average house prices at ten times the average salary is unsound and unsustainable. In the long term lower housing costs should actually benefit our economy.”

Well, up to a point, for consumers and first time buyers. But tell that to sellers and housing investors, where the prospects are bleak.

McDonagh. “Firms report that employment in house-building has fallen by 50 per cent in the last year. Bigger companies that specialise in infrastructure projects have also noticed a downturn in work.. They report that they expect to lay off half their workers by next summer. Two-thirds of these firms say they are already sending hundreds of workers to work on projects outside the north, mostly in Britain.”
On employment, Mr Robinson looked back: “Even during May to June of this year, quite remarkably, given the pattern of the last thirty years, our unemployment rate at 4.4% remained below the UK average and down from 7.3% a decade before. In fact Northern Ireland has created over 100,000 employee jobs in the last ten years. Mr McDonagh looking ahead to “a rapid rise in unemployment (expected) to reach 6 per cent by the end of next year. That would mean an extra 10,000 people losing their jobs.”

And he warned: “targets set by the Stormont executive in the Programme for Government just a year ago are already looking outdated and unobtainable. While Mr Robinson kept sailing on course: The Assembly and Executive have already approved a three year programme for Government and Budget and a ten year investment strategy. In a four party executive encompassing the range of parties we have here this is no small achievement!

The differences mirror the contrast we noted on Monday between Michael Smyth of the University of Ulster’s commenting that: “Northern Ireland is in much better economic shape than it realises but is in danger of talking itself into a recession”.

And Richard Ramsey, Northern Ireland economist with Ulster Bank, reporting that the number of new orders fell for a ninth consecutive month during August.

The contrasting assessments tend to reflect the differences in outlook between the public and private sector.

Note to DUP press office: please learn how to spell the Taoiseach’s surname. It helps communication to get it right.

  • Mack

    “But tell that to sellers and housing investors, where the prospects are bleak.”

    I disagree Brian. Things are bleak for housing speculators – those who invested at hugely inflated prices hoping to sell on to a greater fool for a capital gain. But for genuine investors, those who never forgot to ask “What price?” when purchasing their assets – falling values are boon. They’ll actually be able to enter the market again and make money renting houses.

    For most sellers things are looking up too. Most people selling a house are moving somewhere else. Often moving to a bigger house. As house prices fall the gap between what they’ll get for their own house and the price they’ll have to pay for their new one decreases. Even for people trading down – all you have to do, to make money in this market is sell now (for whatever you can get) and rent for a couple of years. The easiest money you’ll ever make, and you’d be doing society a service by helping to drive prices lower..

  • Brian

    I blogged on this today, except my comparison was between Philip’s speech and the NI Economic Conf yesterday and the Deputy First Minister’s.

    There were several other presentations yesterday which OFMDFM would have found challenging.

    On the upside FM and DFM both seem on the same page. Pity it is the wrong page though.

    More on http://www.oconallstreet.com

  • Note to Brian Walker: please learn how to spell ‘Taoiseach’. It helps communication to get it right.

    Sheesh!

  • Ulsters my homeland

    “[i]all you have to do, to make money in this market is sell now (for whatever you can get) and rent for a couple of years. The easiest money you’ll ever make, and you’d be doing society a service by helping to drive prices lower..”[/i]

    Mack, how do you avoid the government tax if you don’t buy another property when you sell?

  • Brian Walker

    Whoops ! Horseman “Taoiseach” Good job I’m unpaid, unlike the DUP press office (I assume).