Belfast Telegraph

Friday 31 October 2014

Competitiveness wake up call is a firm challenge

Critical: Sammy Wilson
Critical: Sammy Wilson

In a world competitiveness league table, where Northern Ireland is compared with evidence from 144 countries, Northern Ireland ranks 42nd. More significantly, the UK ranks 8th and the Republic of Ireland is 27th.

This evidence, following research sponsored by the Economic Advisory Group, is a challenge and a wake-up call. That Northern Ireland, even allowing for size and its regional (not a separate country) status, falls so far behind the UK and the Republic of Ireland, is both surprising and worrying.

Complacent reassurance that being 42nd out of 144 is not bad fails to meet the challenge of reasonable ambition. Northern Ireland has GVA per head at under 85% of the UK average. Given the right mix of prioritised policy choices, Northern Ireland does not need to lag behind our immediate neighbours.

There is only marginal comfort in knowing that half of the countries in the EU have a lower score. In reverse, half, including Poland and Estonia, are doing better.

If the Northern Ireland economy is insufficiently competitive with other developed countries or regions, then there is a compelling argument that the reasons should be assessed and widely understood both by the policy-makers in Government and by those who have an ability to make improvements.

The Economic Advisory Group has produced good evidence by drawing on the techniques used by the World Economic Forum (linked to the annual conference at Davos). The results are the first strong evidence on questions about relative competitiveness and there is more to be gained by building on this base.

However, as a region heavily dependent on attracting external investments and selling to world markets, we all need to understand and appreciate the serious implications of correctable differences.

Whisper softly and keep the news private to ourselves: Northern Ireland is significantly less competitive than our nearest neighbours.

When the statistics are aggregated, disappointingly, in only one of 12 'pillars' does Northern Ireland rank in the top 20: 18th in a group assessing comparisons of health and primary education. In descending order, next come our technological readiness (25th), higher education and training (28th), goods market efficiency (29th) and innovation (31st).

Further down the league table 'pillars', Northern Ireland ranks 60th for financial market development, 45th for labour market efficiency and 42nd for our institutions.

When all the performance indicators are further examined to build a picture of the most problematic factors in doing business here, the top five should not be surprising to the business community. In descending order they were:

* Access to finance: 26% of responses.

* Inefficient government bureaucracy: 19%.

* Tax rates: 17%.

* Restrictive labour regulations: 11%.

* Inadequately educated workforce: 9%.

Businesses face the challenge to be competitive. Yet, noticeably the five most quoted problem areas affecting business are largely outside the direct control of individual businesses.

All of these issues come within the interest and agenda of the NI Executive. Three lie firmly within the competence of the regional government. Each of the three emerges as no surprise except as a challenge to the oft repeated complacent responses of ministers. Each of the three could be improved relatively quickly if ministers accepted the challenge.

Two problem areas lie outside direct influence: access to finance and tax rates. Company tax rates are firmly on the agenda and await movement from the UK government. Business finance, despite unconvincing and inadequate responses from the banks, remains a tense area and Finance Minister Sammy Wilson has made his critical views known but with poor responses.

The annual report of the Economic Advisory Group, chaired by Kate Barker, intends to go further in formalising the best approach to assessing competitiveness on a continuing basis. In addition, the group will make proposals on how we should tackle the serious questions of tackling competitiveness. This potential agenda calls for some early wins to demonstrate serious intent.

Whisper it softly and keep it private to ourselves: Northern Ireland is significantly less competitive than our nearest neighbours

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