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Last Updated: Tuesday, 18 March 2008, 10:06 GMT
Ten years of NI's economic growth
By John Simpson
NI economist

The Northern Ireland economy is still recovering after the prolonged disruption of the Troubles.

The levels of private sector investment fell, the number of new businesses were fewer than could have been expected and, most significantly, for a period, there was a high level of emigration, often from the younger generation.

Cranes
Northern Ireland's economy has grown in the last ten years

Early in the 1970s, the recurring question was 'how much damage will this disruption do to the economy?'

The images of violence and associated political disagreements dominated, to the exclusion of normal economic processes.

The answers (misleadingly) tried to give reassurance. Of course, the economy would quickly recover when stability was restored.

There was no suggestion that political stability would be absent for over 25 years.

Developments in the ten years since the Good Friday Agreement point to two complementary conclusions.

First, the scale and pace of the recovery has been dramatic.

Second, only by recognising the scale of the recent changes can the severe fracturing of the economy in the two preceding decades be appreciated.

The recovery of the economy cannot be simply date-stamped at Easter 1998.

Political change was gradual and faltering. There was a partial build up of confidence in the mid 1990s as the 'cease fires' were implemented and as smaller signs of political movement emerged.

The signs of economic progress are evident over this longer period.

Defining moment

Good Friday 1998 was a conspicuous and defining moment.

Business confidence varied, year by year, but a more buoyant trend developed, reaching a high point in 2006 and 2007, as the political institutions were restored.

The Good Friday Agreement and the associated political developments were necessary, but were not in themselves sufficient to ensure better economic performance.

Of key importance in strengthening the economy was restored confidence for people - that the quality of lifestyles would improve - for private sector businesses and for investors, and the re-orientation of public sector policies to strengthen the economy.

The changes have been extensive. Perhaps most notably, Northern Ireland has enjoyed a big increase in employment, creating two landmark records.

First, unemployment has fallen sharply and the unemployment rate has gone from the highest regional rate in the UK to nearly the lowest.

Second, in an unprecedented change of patterns, Northern Ireland has swopped a pattern of emigration for immigration.

The long history of net emigration has been reversed as people, mainly from other EU countries, have found employment here.

Employment in Northern Ireland has increased by 100,000 people in the last decade.

This was proportionately more than in other regions and 40,000 more than would have matched the overall UK pattern.

Private sector investment, particularly in services, retailing and property, has been dramatic.

The main retail multiples have invested extensively as most recently demonstrated by the completion of the 400m Victoria Square development in Belfast.

Tradable services have attracted external investors in specialist call-centre and IT businesses.

Perhaps one of the clearest signs of progress has been the enhanced market for property whether commercial, office or housing.

Another feature of the past decade has been the reduced levels of employment in manufacturing businesses.

Over 18,000 fewer people were in this sector in 2007 than in 1997.

A small consolation is that this fall of 18% to 88,000 has been much slower than the 28% fall across the UK.

The construction industry has defied the 'nay-sayers' who doubted its ability to increase output to meet the new demand.

Construction industry employment and output have stepped up dramatically (although in late 2007, there has been a temporary dip in orders for the new-build housing market).

The Government annual capital programme has more than doubled to reach 1.6bn in 2008-9.

Priority policy

The ten years since the Good Friday Agreement have given impetus to the more positive role of government in the economy.

The strongest indication of new thinking emerged in the Programme for Government papers for 2008-2011, now endorsed by the Executive and Assembly.

Economic development is now acknowledged as a priority policy.

Steps to convert the policy into more effective action will be carefully scrutinised.

Central questions will lie with the orientation of the strategic investment programme, the revision of the strategy of Invest NI in support of higher value added investments, and the sharper focus of the official response to the skills shortages and extra vocational training.

Ten years on, life is better, living standards are higher and more people are in active employment.

Without the Good Friday Agreement, how much of this would not have happened?

But one indicator offers a salutary reminder of how much further the economy must improve.

In 1998, using the normal indicator of GVA per head (gross value added), in Northern Ireland average GVA was 80.6% of the UK average. In 2007 it is estimated to be 81.4%.

Ten years of better progress has had only a small impact on the relative differences of income, even though employment numbers have improved sharply.

John Simpson is a Northern Ireland-based economics consultant. He is a former academic at Queen's University, Belfast, and his appointments include Visiting Professor in the School of Marketing, Entrepreneurship and Strategy in the University of Ulster, and Commissioner for Judicial Appointments.





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