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How the slump left Northern Ireland hardest hit in UK: Households here have £900 less than they did in 2008

By John Mulgrew

Published 10/04/2015

Unhappy couple listing expenses
Unhappy couple listing expenses

Families in Northern Ireland have suffered a bigger slump in income than anywhere else in the UK since the economic crash - putting the region at the bottom of the list.

Households on average have witnessed their income fall by 4% since the downturn in 2008.

That puts Northern Ireland right at the bottom of 12 areas in the UK - with an average household taking in just £20,930 a year. That's almost £3,000 less than the overall UK average.

The report's authors have blamed the stark figures on a "sluggish jobs recovery" in Northern Ireland, compared to elsewhere in the UK.

Think-tank, the Resolution Foundation - which published the report - said Northern Ireland also experienced the "biggest real pay squeeze of anywhere in the UK" with typical hourly wages falling here by more than 13% between 2009 and 2014. It said average household incomes dropped by almost £900, when adjusted for inflation.

Laura Gardiner of the Resolution Foundation said:

"Northern Ireland experienced the biggest fall in living standards of anywhere in the UK, with typical incomes falling by almost £1,500 between 2008 and 2012.

"This is largely down to the pay squeeze workers faced. Typical incomes have recovered since then but there is a long way to go before they return to pre-downturn levels.

"There are also considerable generational differences behind this headline fall in living standards, with pensioner households likely to have fared far better than those of working age."

According to Professor Neil Gibson, director of Ulster University's Economic Policy Centre, Northern Ireland is coming off the back of a bigger inflated market, and benefits from having a much lower cost of living.

"One might have expected a fairly significant fall in Northern Ireland, given how inflated our position was in the UK," he said.

"Secondly, we also have to remember you have to put income into the context of where you are, and what you can buy.

"If you have the lowest domestic rates, don't have water charges, prescription charges, as well as lower tuition fees, then your average income goes a lot further.

"The cost of living is lower in Northern Ireland - household income doesn't translate directly into standard of living."

"And coming off a peak in Northern Ireland, it will have a bigger correction, so it is a slightly unfair comparison."

Economist John Simpson said "the contrast in the statistics of the Resolution Foundation must also point to the widening gap with other regions such as the north East of England, Wales and Scotland".

"Government austerity measures have also affected these regions. The challenge is for Northern Ireland to upgrade the application of economic policies more selectively and ensure that they are targeted more effectively."

As a result of the fall, Northern Ireland has now been overtaken by areas such as the north east of England and Wales.

The study also highlighted a generational divide in experiences felt as a result of the downturn.

It found that typical incomes among pensioners were 9.4% above pre-recession levels.

That contrasts to a slump of 4.6% among working-age households, meaning it impacted "very differently" across Northern Ireland.

Meanwhile, new car sales in Northern Ireland slumped by 2% last month. That's despite a continued revving up of sales elsewhere in the UK.

New vehicle sales are often used as a barometer of consumer confidence in an economy.

The decrease contrasts with rises of at least 2.5% in all other three UK regions - with sales in England rising by 6.5%.

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