Celtic Tiger's return is the 'key to Ulster growth'
Northern Ireland's recovery is lagging behind the rest of the UK but will benefit from a resurgence in the Republic's economy in the next few years, the man who coined the phrase 'Celtic Tiger' in the 1990s has said.
Kevin Gardiner, chief investment officer for Barclays, said the large part the public sector plays in the economy here will be a drag on economic recovery but better-than-expected growth across the border will go some way to making up for the lag.
"I think Northern Ireland is going to recover but I think it probably won't recover as quick as the rest of the UK," he told the Belfast Telegraph on a visit to Belfast. "But it will probably be helped by the fact that the Republic is growing a little faster than the rest of Europe."
That expected growth for our nearest neighbour economy, which was hit hard by the global credit crunch in the years following 2007, is based on the presence of the same factors which helped kickstart the Celtic Tiger years.
That period of stellar growth for the Irish economy started in the late 1990s for more than a decade and had been described by Mr Gardiner in a report he penned for Morgan Stanley which first made mention of the Celtic Tiger.
"We tend to exaggerate the good times and also the bad times," he said. "People in the Republic were far too optimistic about house prices and bank lending back in 2006/2007 and they then became far to pessimistic in the downturn."
"One of the things people have overlooked was that a feature of the Celtic Tiger report I wrote 20 years ago was that growth in the Republic has not been driven by housing markets or banks or structural assistance elsewhere in the EU," Mr Gardiner said. "It's driven by foreign direct investment, a flexible labour market and low tax rates.
"All those thing are still in place so people have been focusing too much on the undoubted bad news and have been overlooking the potential for recovery."
A healthier economy in the Republic is good news for Northern Ireland because the region is our biggest trading partner with the vast majority of exports heading across the border.
And we will need the boost.
"Things are settling down and beginning to recover (in the Northern Ireland economy)," Mr Gardiner said.
"One of the issues you have over here is that the public sector is very big and important in the economy. And it's never going to have the vibrancy which which, for example, the south east of England – with its international exposure and large financial services sector – enjoys.
"I think Northern Ireland is going to recover but I think it probably won't recover as quick as the rest of the UK," he concluded.
Kevin Gardiner is chief investment officer of Barclays in Europe. He coined the term 'Celtic Tiger' in 1994 in a report he authored for his then employers Morgan Stanley. In it, he forecast more than a decade of surging economic growth for the country, a prophesy which turned out to be true. Bloomberg reported this week that Mr Gardener had resigned from his post at Barclays.