Belfast Telegraph

John Simpson: £1bn figure debatable, but we can't dispute political impetus needed to boost prospects

Economist John Simpson
Economist John Simpson
John Simpson

By John Simpson

Carolyn Fairbairn, director general of the CBI, has effectively challenged Northern Ireland's politicians to get back to work and accept their responsibilities.

The CBI argues that the two-year absence of the Assembly and Executive is costing £940m.

This is an important, well-argued opinion that should lead to a positive response.

Two questions are immediately relevant.

First, does this professional assessment stand up to acceptable scrutiny and verification?

Second, does the CBI opinion go far enough in pointing to the reasons for the loss of output as well as offering guidance on the action programme that is now needed to put the local economy back on an acceptable development path?

The first question is more readily answered than the second. As a reaction to the CBI assessment, it is vulnerable to a degree of criticism because it can be seen as "shouting" at the politicians with abstract concepts rather than outlining an operational agenda.

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This might convince local politicians and businesses that there are realisable options to generate a stronger economy.

Why not adopt the "business approach", they are asked?

The CBI is right to argue that the local economy has been damaged.

By the standards of recent decades, the Northern Ireland economy has moved into the slow lane.

When compared with the overall UK experience, and even more so when compared with the Republic's economy, it has survived quite well but, in a comparative assessment, it has grown more slowly than might have been expected. At the risk of understating the relative comparators, Northern Ireland has been lagging the UK by about 2% in two years, or rather more since the Brexit referendum.

The CBI conclusion that the cost has been £940m is the result of a refreshing updating of its professional methodology.

The amateur economists who distrust these calculations will repeat their cynical reservations. That is, sadly, too glib.

Some observers who doubt the CBI conclusions will emphasise that, in terms of jobs and employment, Northern Ireland has not had it so good for a long time.

That feature is welcome and slightly surprising until set in the context of the sustained high employment across the UK alongside a period of low productivity improvements, locally and nationally.

Jobs have been maintained but real incomes have lagged and some have fallen in real terms.

The second question posed by the CBI conclusion asks for evidence of where the £940m has been lost.

That answer is harder to prove. Investments postponed are invisible. Infrastructure improvements await political impetus. The proof lies in the comparative evidence.

The CBI has sensibly challenged the politicians in the Executive. It has also, rather more timidly, pointed to the perils of Brexit.

A no-deal Brexit on October 31 without a backstop would be frighteningly worrying.

That merits another headline from the CBI for our politicians.

John Simpson is an economist

Belfast Telegraph


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