Belfast Telegraph

Northern Ireland's lack of competitiveness 'bigger problem than Brexit'

Esmond Birnie
Esmond Birnie
Ryan McAleer

By Ryan McAleer

A senior economist at Ulster University has claimed Brexit is not the biggest problem facing the local economy.

Speaking at an event in Londonderry yesterday organised by the Irish League of Credit Unions, Esmond Birnie said Northern Ireland's economy was slowing down well before the EU referendum in June 2016.

He said: "In fact, for at least a century the NI (sic) economy including here in the north west has had a fundamental competitiveness weakness, so Brexit is not our biggest problem."

However, the economist accepted that many uncertainties still surrounded the UK's withdrawal from the EU next March.

"Challenges lie ahead but critically important is how businesses and policy makers choose to respond to those challenges," he said.

"If they respond appropriately post-Brexit, Northern Ireland in, say, 2030 could even be better off than it would otherwise have been."

However, he said the reverse could also be true.

Dr Birnie said we have lagged far behind the Republic and the rest of the UK in terms of economic growth, something he claimed was driven by "a deeply rooted competitiveness problem". Recalling the significant cluster of world exporting businesses in the north west, he said: "They went and were never entirely replaced.

"So the Northern Ireland economy and by implication society, face big structural difficulties which long pre-date the June 2016 Brexit vote.

"Even if one accepts the UK Treasury's long run economic analysis - that the cost of Brexit will leave NI's GDP about 8-10% below what it would otherwise have been in about 2030, the implications of the competitiveness shortfall dwarfs that.

"For example, in 2016 in each hour worked the average worker in France, Germany, Switzerland and Sweden produced about one-half to two-thirds more than his/her counterpart in NI.

"That is, this really big loss of output and far exceeds any (negative) Brexit impact."

He claimed that Brexit could result in economic inactivity being reduced, if the outside pool of labour is reduced.

Dr Birnie added that moving away from a system of farm subsidies could actually be an advantage.

He suggested that the push to do things differently could benefit the region in the long run.

"There could be a trade off between what is good for us in the short term and what would be advantageous in the longer term," he claimed.

Belfast Telegraph