Stormont must devise a hangover cure as recession digs its heels in
Northern Ireland has endured a deeper and longer recession than other parts of the UK. Only a comparison with the recent trends in the Irish economy offers a nearly comparable experience. Last week's unemployment statistics paint a worrying picture.
The differences between Northern Ireland and the rest of the UK point towards important policy lessons for Stormont, Westminster and Brussels.
A passive acceptance of the worrying consequences of the (so-called) national or international trends is an inadequate response. Local policies and decisions have, in part, also contributed to the depth of the recession.
A slow recovery in the UK economy is not yet assured but, unhappily, there are reasons to be less optimistic locally.
One of the dangers in the analysis of the economic trends is an assumption that Northern Ireland is in a comparable position to other Great Britain regions and will recover as other regions do. That assumption is questionable.
Northern Ireland, more than most of Great Britain's regions, has enjoyed the excessive levels of Government spending which have created the unsustainably large Government debt. In reverse, Northern Ireland must now take its painful share of the reductions.
Northern Ireland, in parallel with other regions, has experienced the crash in the banking sector as excessive lending later needed special official support to cope with impaired lending.
Northern Ireland, to a degree not seen in other regions, experienced a larger boom in residential property prices in 2005-8, than elsewhere. Since 2009, the fall in residential property prices has left a much larger hangover of negative equity than elsewhere.
Each of these differences has implications for influencing the recovery processes.
The hangover of negative equity on residential property of over £2bn is much larger than in other regions and can more usefully be compared with the state of the Irish housing market. In the Republic of Ireland the crisis in residential property prices and defaulting mortgage repayments has led to new legislation to push lending institutions into bigger efforts to restructure lending. In Northern Ireland, reliance on conventional market forces means that there is the danger that heavy negative equity will lead to an extended more difficult housing market and a major drag on consumer spending.
Unfortunately, from a Stormont perspective, this is not a devolved function. From a London perspective, this is only a small part of the UK scene which has not merited specific action.
The commercial banks in Northern Ireland have been widely criticised because they are alleged to be either unable (which they deny) or unwilling to lend to local businesses. This apparent market failure is, in part, understandable. However, there are two local factors which seem to add further to Northern Ireland's businesses disadvantage.
First, many businesses have an inherited debt on property which, when added to a business case for new lending, reduces the viability of the overall assessment.
Therefore, a mechanism to disaggregate an inherited property debt from a business proposition is needed.
Second, Northern Ireland appears to get little benefit from the official UK schemes to encourage the banks to extend business lending. The Finance for Lending Scheme, devised by the Bank of England, is not available through the First Trust, Bank of Ireland or Danske Bank since they are not within the Bank of England remit.
This artificial constraint is unhelpful. These banks operate in Northern Ireland and have note issue authority even though they are not headquartered in Northern Ireland. The Bank of England and the Central Bank of Ireland might act to correct what looks like an anomaly.
Our recession is deep, long lasting and will ease only slowly. There is a strong case for Stormont to intervene to exert influence and also to use Stormont's budget powers for greater proactive involvement.
Whitehall and Brussels must also be asked to take account of the depth of the recession.