Belfast Telegraph

Scottish yes vote would have 'drastic effects' on Northern Ireland

By Margaret Canning

A 'yes' vote in the Scottish referendum will have a "substantial" effect on Northern Ireland – politically, economically and socially – an economic report has said.

The quarterly economic observer (QEO), from the trade union-funded Nevin Economic Research Institute (NERI), said a vote in favour of Scottish independence in the September referendum would have drastic effects.

"Should a 'yes' vote prevail, the dynamics of regional economies within the UK would be fundamentally altered, and little preparation or research has been devoted to examining such an outcome," the QEO said.

The possible impact of the Scottish referendum – the timing of which has also resulted in the Prime Minister putting off a decision on whether Northern Ireland should be able to set its own rate of corporation tax – added to existing uncertainty, the QEO said.

The report also pointed to the difficulties caused by low wages in Northern Ireland. In 2013, 25% of workers in Northern Ireland were earning less than the London living wage of £7.45 per hour, NERI said.

And 17% were classified as low-paid – defined as two-thirds of the median gross hourly wage. For the year 2013, the median hourly wage rate of £10.19 would mean a low-pay rate of £6.79 per hour. And 9% were earning only the national minium wage of £6.19 or less. NERI economist Paul Mac Flynn said: "Northern Ireland has significantly higher levels of low-pay than any other UK region and low-pay is of most concern in sectors of the economy that are growing."

He said consideration should be given to enforcing the national minimum wage, promoting the living wage across the Northern Ireland economy and examining the case for sectoral wage agreements.

The QEO said Northern Ireland was a "small regional economy" which depended on the UK's medium-term growth but also faced the risk of that growth passing it by.

Political instability inside Northern Ireland, particularly the failure of the Haass talks, was also adding to general uncertainty. "The continuing political stalemate over issues such as welfare reform has also contributed to the unpredictable nature of policy decisions in Northern Ireland. Finance Minister Simon Hamilton has cautioned that the economic consequences of not implementing a Welfare Reform bill will begin with a £5m monthly fine rising to £250m annually."

FACTFILE

NERI's quarterly economic observer looks back on the financial crisis started in 2008, but sounds a note of caution on the nature of the UK's economic growth so far. "Growth has been led by increased household consumption and that raises serious concerns about the sustainability of this recovery," it said.

Belfast Telegraph

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