Page last updated at 10:08 GMT, Friday, 1 January 2010

A year of bank bail outs, the housing crash, recession

The recession hits: in the past year 54,000 people joined the dole queues

From boom to bust - it was the year when it all went wrong. BBC NI Business Correspondent Kevin Magee looks back at 2009.

The noughties will be remembered for bank bail-outs, the housing crash and recession - which conspired to undermine the economic gains made earlier in the decade.

After the boom of the noughties came the bust. The last decade saw Northern Ireland turn the corner from a traditional unemployment black spot to an employment hot spot. But at the tail end of the decade, recession hit.

"I think the last decade will always be defined by the collapse of the financial institutions and their impact on the real economy, and the ability of the policy makers to bring us back from the point of disaster as well, " said Angela McGowan, chief economist at the Northern Bank - one bank that did not require a publicly funded lifeline.

Recession is measured by falling output, but the key economic indicator which is much more meaningful to most people is unemployment. During the decade, NI Plc performed well.

"There was phenomenal economic growth. And in terms of employment growth, this was one of the fastest growing regions of the UK, and unemployment had reached some of the lowest levels ever," said Ms McGowan.

While that may have been the case, question marks were raised about the quality of some of the jobs being created.

Last year, the job creation agency, Invest NI was given a severe ticking off for an over reliance on attracting too many low paid, call centre-type jobs at the expense of those more likely to lead to greater productivity.

But the end of the decade told another very different story. In the past year alone another 54,000 people joined the dole queues - a staggering increase of 56% in one year alone.

The construction industry suffered badly in the recession

No one sector escaped the ravages of recession. Although construction was badly hit, the misery was spread across all sectors. NI's manufacturing sector witnessed 8,400 job losses with employment in the service sector also falling by 12,700.

And the pain is far from over. With the recession predicted to technically end soon, unemployment, it is said, will continue to climb for some time.

But just to keep a sense of proportion, it is important to point out it will remain a long way off the highs of the 1980s.

Economists are predicting that it could be years before the economy returns to the record employment levels reached in 2007.

The turmoil in the banking sector caused by over zealous lenders saw the government move to bail out the banks, with the taxpayer forced to dig deep and lift the tab.

First Northern Rock, followed by the Royal Bank of Scotland - owner of the Ulster - and then the Lloyds Group were bailed out - total cost to the taxpayer: £850bn.

This mountain of debt will have to be repaid - and the net result is public sector cuts are inevitable. No-one, it seems, will be immune and the fear is some will end up paying more than others.

"That really is the big worry for Northern Ireland where the public sector is so large. Unlike in the Republic of Ireland where tough actions are being taken soon, it really is being postponed in the UK and in Northern Ireland until the next election.

"What this means is that the legacy impact of the recession will be more drawn out here than in other countries where there was swifter action," said Graeme Harrison, the lead consultant from Oxford Economics.

shopping boom
One bright note is the boom in cross border shopping

Amidst the doom and gloom, the fillip from cross-border shopping continued unabated in 2009. One small piece of collateral damage reported was that locals in Newry were forced to do their own shopping in outlying towns to escape the invasion from the south.

The cross-border shopping boom will continue as long as the currency differential between the pound and the euro continues.

While this has undoubtedly buoyed the retail sector, there was some concern over the extent to which benefits are spread among local independent traders, rather than concentrated among a handful of retail giants.

As we turn the page into a new year, we are entering a new era of austerity, as the economic hangover for the noughties will unfortunately be a lasting one.

The key question as we approach a new decade, is for just how long we will be expected to continue paying for the previous one?

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