Radical economic policy is needed to beat complacency
Arlene Foster, as chair of the Executive Sub-Committee on the Economy, carries a major responsibility to ensure that her committee and its special group of economic advisers set a dynamic operational path to rebalance and rebuild the economy.
The Executive has all the major levers of domestic economic management to influence competitive capability and shortly the Treasury is expected to add to the Executive’s authority by devolving responsibility for company taxation.
The consultative paper published two weeks ago starts with an easy consensus. In the last 50 years, even with some ups and downs, the regional economy has not generated satisfactory outcomes. The structural analysis has been well rehearsed. Past outcomes have shown poor productivity, low economic activity rates, poor skills, and high emigration rates of talented people. Then, in addition, political instability has eroded, and still erodes, business confidence.
We all know these fundamental ‘facts’.
The tensions of disagreement emerge when the dynamics are examined. Are there signs of potential progress? Has the economy really been the priority? Are policy improvements in progress?
A yes to these questions leads into a recipe to give the processes a stronger push. That would be reassuring and build success. If the answers are in doubt, or even negative, then there is no reassurance or conviction for success.
The consultative paper makes uncomfortable reading. Is this the best thinking of her expert team? Does the team have new more radical ideas which do not repeat older inadequate conventional concepts? The consultative paper is founded on a truism. Building the private sector is more likely to succeed if businesses (and new businesses) compete successfully in global markets and prosper by capturing external and export markets. That is a logical ambition. However, it begs the question of whether businesses in Northern Ireland are sufficiently competitive to trade and grow with assured profitability.
Northern Ireland must sell its products and services to willing buyers outside this region. For this to happen, the businesses must improve their own performance whether through innovation, development, productivity, managerial skills and marketing. Delivery of these qualities is largely an internal responsibility.
Local businesses also rely on efficient public services for transport and energy and need a reliable physical infrastructure, along with skills and education programmes that meet high international standards and a planning regime that is coherent, predictable and expeditious.
More than is sometimes appreciated, local businesses need the reassurance of political cohesion.
For understandable reasons, Northern Ireland is presented externally as a good place to do business. To formulate a more realistic economic strategy, progress will only be possible if there is an honest internal appraisal which acknowledges that there are deficiencies which should be remedied.
Do local businesses have viable opportunities to capture bigger external markets which they are not taking? Not likely! More realistically, local businesses know that they have to fight hard to compete externally and that profit margins are often very tight. Competitiveness must improve.
Too many of the strands of official policy start with degrees of complacency (we are getting there) or denial (there is no problem).
There are many weaknesses that are suppressed when the argument is made (even wrongly) that the economy has been and is the priority. Can the myth of a high priority for the economy now be challenged and then be made a reality?
The consultative paper on economic priorities is well researched but lacks the dynamic of fresh thinking and new emphasis. Increased exporting is critically important but that is the targeted outcome, not the operational fulcrum. The paper needs to identify factors determining competitiveness and profitability, including (but not only) the awaited Treasury corporation tax proposals.
Northern Ireland needs a radical economic policy agenda which effectively challenges current complacency.