April 22, 2024
Economy

Conor Murphy: Economy minister to outline his vision for NI


  • By John Campbell
  • BBC News NI economics and business editor

Image source, Getty Images

Image caption,

Sinn Féin’s Conor Murphy is to outline his vision for the Northern Ireland economy

Stormont’s new Economy Minister Conor Murphy is due to outline his vision for the economy.

Mr Murphy will address the Northern Ireland Assembly later on Monday.

As he has been preparing his speech, Mr Murphy will have been aware of two big stories that can be told about the performance of the Northern Ireland economy.

There is one of surprising short-term resilience and another of chronic underperformance.

Mr Murphy’s speech comes as Finance Minister Caoimhe Archibald introduces the opening stages of the Budget Bill at Stormont.

Three big shocks

Over the course of almost a decade the economy has been hit by three big external shocks: Brexit, the pandemic and energy price inflation.

In combination, these have hit business investment, political stability and consumer spending.

Given the relative fragility of the Northern Ireland economy it would have been unsurprising if the shocks had led to a deep recession with mass job losses and business failures.

Image source, Getty Images

Image caption,

The employment rate measures the percentage of working-age adults who are in a job

Overall economic output has finally made up all the ground lost after the 2007 crash.

The official figures suggest Northern Ireland has had a much stronger post-pandemic recovery compared to the UK average: growth of 6.2% compared to 1.5%, up to the third quarter of last year.

A large part of that resilience will be down to the financial support provided by the UK government during the pandemic and the energy crisis – measures like the furlough and the energy price guarantee.

But there have been pockets of strength in the private sector, particularly in the services sector.

This probably reflects strong services exports from the “back offices” of global firms in Northern Ireland, as well as some locally-founded businesses doing similar work.

Poor productivity

However, on a longer view Northern Ireland has a very big economic problem – persistently weak productivity.

Productivity is a measurement of the amount of economic output generated by each worker.

In the long-term economic growth, higher wages and rising living standards are dependent on rising productivity.

The UK’s productivity performance has been poor since the financial crisis in the late 2000s and Northern Ireland has consistently had the poorest performance of any UK region and is also far behind the Republic of Ireland.

Image source, Getty Images

Image caption,

The productivity gap between north and south has been widening for 20 years, according to researchers

The structure of Northern Ireland’s economy, low levels of investment and geographical peripherality have all been suggested as important factors.

This problem has been subject to increased academic analysis, led by David Jordan and John Turner at Queen’s University.

Pointless policies?

The key thing to look out for in Mr Murphy’s speech is how he hopes to tackle the productivity problem.

It is a daunting challenge because the Queen’s University research also found little proof that decades of government policies had done much to improve things.

“While improving the competitiveness of the NI economy has been a central aim of policymakers for many decades, there is little evidence to suggest policy interventions have been successful in closing the productivity gap,” it concluded.

“Part of the explanation may be that, while improving productivity is often included as an aspiration within economic strategy documents, it is rarely used as a means to evaluate the success of policies or measure outcomes.”



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