The Executive must take action within its own powers to counteract the slowdown effect of Brexit. That’s the consensus among economic commentators. But as yet there’s little sign of that happening. The begging bowl strategy was already failing and bluster against “ austerity “ will have declining impact. And with the replacement of inclusive multi-party power sharing by a two party coalition with an opposition, there are signs that the budget process has become less transparent.
According to PWC’s latest Economic Outlook
The latest NIEO forecasts that the deceleration in Northern Ireland’s economic recovery, which has been evident over the past year, will continue, but that outright recession is now unlikely. However, despite recent positive economic news for the UK as a whole, the report says that local output remains around 7% below the pre-recession peak in 2008 and that the region is not generating the productivity gains that will create wealth and increase wages and household disposable incomes.
PwC also says that, the pace of recovery is threatened by a combination of global slowdown and post-referendum uncertainty. The region’s economic growth slowed from 2.2% in 2014 to 1.5% in 2015. PwC says Northern Ireland can expect growth of only around 1.2% in 2016 and that could fall to as low as 0.3% in 2017, in response to the Prime Minister invoking Article 50, which starts the clock on the UK’s EU exit process.
Commenting on the options, Dr Esmond Birnie, PwC chief economist in Northern Ireland, said:
“Theresa May said that “Brexit means Brexit” and business, politicians and others should work on the principle that this is inevitable and focus on developing radical options for growth and international competitiveness.
“The outcome of Brexit is more likely to be favourable if the Executive can clearly identify its key priorities for a post-Brexit world and lobby vigorously for these to be included within the UK’s negotiating position. It would also be a mistake if this process automatically assumed continued, unfettered Single Market access.
“Merely negotiating for new signatures on the traditional cheques to fund the status quo and assuming that HM Government will simply replace all current EU funding streams, will not close the existing prosperity gap with the rest of the UK, let alone rebalance the economy, drive up productivity and restore wages and household incomes.
The future level of subsidy to replace EU grants after 2020 looks bleak, as the chair of the UK Treasury Select Committee argues:
The Government should explain clearly to the public that most of the fiscal dividend available from the EU budget after Brexit will not materialise.
The CBI’s David Gavaghan reiterates the familiar plea to he Executive to “ raise revenue” He fears that the target to create 55,000 new jobs which were “ on the cusp” may now not be reached.
The Confederation of British Industry (CBI) in Northern Ireland has unveiled a series of measures which it said will ensure the north doesn’t endure a “decade of lethargic economic growth”.
Among them, a call to allow universities to increase tuition fees while the CBI also believes some parts of the public sector estate should be sold off.
It also wants revenue raising measures to be introduced across “the whole range of our publicly owned asset base which will in turn enable new sources of funding to be sourced”.
But with the DUP and Sinn Fein uniting to oppose water charges once again, there’s no sign of that happening.
At the same time, the political system is starting to adjust to the shift to two- party government with an opposition from inclusive power sharing.
Former Alliance minister Stephen Farry demanded the Assembly and its committees be given the right to access details on the redistribution of unspent departmental money.
The concern from all three Opposition parties came after ministers said the more “streamlined” Executive – now without SDLP, Alliance and Ulster Unionist ministers – had allowed for a different approach to be taken to the most recent spending round.
UUP leader Mike Nesbitt said: “These actions indicate the Executive are going to attempt pull the shutters down against any scrutiny from the official Opposition.
“The different environment that they claim to be operating in appears to be a pretty insecure one.
“It doesn’t bode well if the Executive is going to shield how it does business with North Korean levels of secrecy.
DUP MLA Christopher Stalford replied, however;
“The kind of information shared with committees is actually now more in line with the experience at Westminster. That Mike Nesbitt would believe this represents ‘North Korean levels of secrecy’ speaks volumes about the UUP in Opposition.
In written responses the Minister of Agriculture, Environment and Rural Affairs Michelle McIlveen and Communities Minister Paul Givan said: “We are now in a different environment, particularly with the introduction of an official Opposition. Therefore, processes have changed.
“This has replaced the previous bidding process and will allow for a more objective assessment of genuine pressures across departments.”
The last cash share-out included an extra £72m for the health service, a further £30m for schools – £5m of it targeted at special educational needs – and £25m for roads maintenance and building schemes.