Red Alert for Belfast

The think tank Centre for Cities has placed Liverpool, Belfast and Hull on “red alert” status in a review by Oxford Economics of the social, economic and environmental strengths and weaknesses of 64 cities in the UK. The Centre is a think tank backed by the Local Government Association, an umbrella lobby body for councils. Belfast’s is one of the “core cities “ studies. The main message i is that the recession is wiping out many of the gains of the past ten years and widening the North-South divide in GB again – although it’s not a straightforward picture. London suffered a stunning blow to its much vaunted financial services last year and is heading back to 1998 jobless levels. Belfast is not quite at the bottom of low performance tables, e.g.:

Social deprivation index

59 Belfast
60 Birmingham
61 Sunderland
62 Blackburn
63 Hull
64 Liverpool

But it will come as no surprise that the Belfast urban area is judged vulnerable because of the dominance of its domestic services sector and the stubbornly high level of long term unemployment Incidentally, Belfast’s population is listed as 647,000 which takes in more than the greater urban area. Population growth is among the lowest in the UK. Rating Belfast in surveys like this is valuable because it places the city in an broader economic and social context rather than relegating it to an eminently forgettable post Troubles corner. The message cannot be over-stressed: with public spending due to contract sharply in a couple of years, the days of the peace dividend are drawing rapidly to a close. Belfast section of the report

Belfast – tackling worklessness through the recession?

Belfast has seen rapid change in the past decade, with unemployment falling to around 4% in 2007 from over 9% a decade earlier as the city has matched political progress with greater economic dynamism. The traditional industries around which the city grew, like shipbuilding and textiles, have all but disappeared. Belfast – the economic driver for Northern Ireland – is now largely a service-based economy. A recent surprise growth sector has been hotels and tourism, and the city has started looking to grow a financial services sector. Over the years, Belfast has benefited from a strong public sector presence – accounting for around 40% of jobs. But the economic transformation is far from complete – the working age employment rate in Belfast City is only 65.5%, with more than one fifth of those registered as unemployed out of work for more than a year .

Belfast’s economic progress means that the city enters the recession from a stronger position than previous downturns. And despite fiscal constraints on future public spending, there is still backing for key regeneration projects. In November 2008 the Northern Ireland Government
confirmed backing for the Titanic Quarter in East Belfast – expected to create up to 600 jobs in construction and 200 in tourism when finished.

The city will inevitably be affected by contractions in both the UK and Irish economies. Based on a scenario of a 2% drop in GDP, Oxford Economics forecasts a fall in employment in the city of 5,000 over 2008-09 – or 2.4% of total employment. Most importantly, this increase in jobless will come on
top of existing concentrated pockets of high levels of worklessness – a legacy from decades of industrial decline. Given the extent of worklessness in Belfast, responding to rising unemployment during the recession must not take attention away from this longer-term constraint on the city’s success.

This sounds like a warning not to place too much reliance on prestige projects like Titanic Quarter.

  • dub

    one wonders where derry would come in that list?

  • Brian Walker has highlighted the relevance of the think tank, Centre for Cities’, report — Cities Outlook 2009. I expect much of the Belfast chatter to focus on the finding that our city has been put on “red alert”, in light of the deepening recession.

    However, having quickly read the report, there are other findings about Belfast that I find at least as interesting.

    First, the report argues that this recession will particularly hit hard those cities that rely much upon hotels/restaurants, finance/insurance, and construction. Their table shows that there are many other cities that are in a more precarious situation.

    Centre for Cities also compiled indices for economic peformance and social deprivation (amongst others). What should concern policy makers in Northern Ireland is that while Belfast and the province as a whole have a middling ranking for economic performance, we remain stubbornly poor in regards to social deprivation: 59/64th.

    Indeed, Belfast was the worst in regards to percentage of population with no qualifications, at 24%.

    While it was no surprise to learn that wages in greater Belfast are lower than the Great Britain average, it is interesting to see the scale of employment rate within the same area, from a high 82.1% in Carrickfergus to a low 65.5% in Belfast City.

    Part of Centre for Cities’ proposals include greater devolution:

    For cities to lead Britain’s return to growth, they need greater control over employment, training, housing, and transport policies. With so many decisions being taken in Whitehall and Westminster, cities have found it hard to respond quickly and decisively to fast-changing local economic circumstances. The Centre will be following these developments closely over the coming months … During 2009, at the height of recession, the Centre for Cities will continue to make the case for greater devolution.

    This was written with English cities in mind, but begs the question for us and our local Executive Minister, Assembly Members, and District Councillors. How effective is such devolution if there is (a) insufficient financial resources or instruments and/or (b) insufficient political will?

  • Jean Baudrillard

    It’s interesting to compare this report to the
    FT’s analysis of job loses from a few days ago.

    http://www.ft.com/cms/s/0/a5a13650-e71b-11dd-8407-0000779fd2ac.html

    Never mind Belfast – of their 12 worst UK council areas in terms of job loses – five are in NI; with Magherafelt at the very top with a massive 168% increase in claimants.

    I suspect Belfast does not appear on this list purely because its much larger population masks a large increase in the total number of claimants.

  • Driftwood

    Interesting article on the guardian page:-

    http://www.guardian.co.uk/society/2009/jan/26/regeneration-titanic-quarter-property-development

    Talk about flogging a dead horse! Does anyone seriously believe the Titanic museum is going to be the economic saviour? Have these people learned nothing from the many visitors centres white elephants of recent years?

  • mnob

    Jean – thats the point – you could argue that those council areas were in the ‘top’ 12 because of their low size wrt GB council areas i.e. a small increase in claimants warrants a hgher percentage. Also don’t forget that at 4.1% our unemployment rate is *much* lower than the GB average so any increase is going to be seen as significant.

    What I find significant about the report is that Belfast is mid table wrt the economy beating cities like Glasgow, Derby, Nottingham and not a kick in the ass away from cities like Southampton. Even Belfast’s economically active figure compares favourably (given that it is for 2006 while the other figures are 2008), but then maybe I’m a glass half full type of person 🙂

  • Jean Baudrillard

    mnob – I would treat the Belfast figures with some skepticism.

    Stats for the city are notoriously unreliable because NI government departments often only collect information at a Northern Ireland-wide scale. Most Belfast figures are therefore based on highly suspect proxies that fiddle about with the NI figure.

    As a result things like GDP and GVA figures for the ciy are pretty much meaningless.

    (This situation alone offers a strong argument for some sort of city level leadership. Government departments don’t give a toss about sub-regional variation despite the fact that what’s appropriate for Magherafelt is probably irrelevant for Belfast…)

    The truth is no one really knows how far down the crapper Belfast is!

  • Harry Flashman

    “one wonders where derry would come in that list?”

    Come off it, at least we’re not as bad as Strabane.

    Hang on, we’re not as bad as Strabane are we?

    {gulp}

    Oh dear sweet Jesus!

  • mnob

    I have to say the conclusions from the report seem to be flawed to say the least. A quick perusal of the government statistics site shows that the gap between ‘north’ and ‘south’ in the UK regions has *widened* over the last ten years. (The only regions that have increased their proportion of UK GVA between 1995 and 2007 are London, the South East and (curiously for the pessimist on this site) Northern Ireland (albeit from a low base). Wales has done really badly, starting from almost as low a base as NI and getting markedly worse.

    How can these be described as gains ?

    Also, how can the regions with the lowest exposure to financial services be the ones that are most hit by the downturn ? This is counter intuative.

    As for an over reliance on travel and tourism – I’m not sure I buy this either – we are still catching up with other UK regions as far as hotels and restaurants etc are concerned. Plus we have a land border with the ROI for which a nice shopping trip to Belfast looks like an attractive proposition.

  • Damien

    St.Patricks train.
    Navan Fort Visitor Center.

  • Toby

    Brian

    Where is your evidence that public spending is due to contract sharply in the next couple of years. The NI Budget document shows steady growth up until 2010/11 at least- do you know something that Nigel Dodds doesn’t? NI faces tough choices for sure, but we are nowhere near the problems in the RoI.

  • Brian Walker

    Mr Ulster — great general summary.

    I share the puzzlement about how exactly Belfast is defined.

    Toby,you ask: “Where is your evidence that public spending is due to contract sharply in the next couple of years?”

    Ask anyone with Finance, Treasury and political lobby connexions apply your common sense and the results of your own no doubt voluminous reading. . ” A couple of years” takes us beyond the present three year plan to 2011/12. Nigel Dodds is fully aware. It may seem we don’t face the Republic’s problems – unless the UK faces meltdown, meaning stiff IMF terms, (or worse, demands for a loan greater than the IMF’s resources), high interest rates, an incomes policy, spending cuts far worse than 1976 etc.etc.. Other than that, NI is not a sovereign state. There may be compensations in that, but on the other hand, I won’t speculate what a Tory government would do to public spending…

  • Toby

    Brian

    There is no hard evidence in your response. Table B10 of the 2008 Pre-Budget Report shows that UK current public expenditure is projected to rise from £628 billion in 2010/11 to £705 billion in 2013/14 with the NI Executive receiving Barnett consequentials as a result. In addition, there is no need to speculate as regards what the Conservatives would do in terms of public spending as David Cameron set this out in a recent speech, whereby they would match Labour’s plans on key public services with 1% real for the rest.

  • tim

    ‘Talk about flogging a dead horse! Does anyone seriously believe the Titanic museum is going to be the economic saviour? Have these people learned nothing from the many visitors centres white elephants of recent years?’

    Agreed Driftwood

    £43.5million of taxpayers money and that’s only the start.

    The Arc might ‘sink’ the whole project for the foreseeable future, especially if investors start ‘bailing out’ of the first phase.

    http://www.abercornbasin.com/news_single.php?ID=8

    Maybe Margaret Ritchie will keep it ‘afloat’ by buying them up for social housing !

  • Nestor Makhno

    tim: Henry McDonald had what amounted to a puff piece on TQ in the Guardian yesterday:
    http://www.guardian.co.uk/society/2009/jan/26/regeneration-titanic-quarter-property-development

    It seems the whole thing hangs on the agreement by “Donegal property multimillionaire Pat Doherty and Dermot Desmond” to stump up the money. Considering the likely 80% fall in the value of property in the Republic one wonders just how keen the pair will now be…

    From purely personal experience any visitor I’ve ever mentioned the words ‘Titanic’ to have either expressed polite disinterest or laughed out loud. Is it really likely to draw millions of visitors from across the world? I wish it all the best – but surely NI has a little more to offer than a leaky boat?