Northern Ireland Economy

[2buyornot2buy]

You have made the jump to creating wealth. we started at paying tax for your own public services and pension. I never suggested that creating more public sector jobs, for the sake of it creates wealth in the country. If those jobs are created due to the increase in infrastructure provision etc it is a different matter.

Wealth and tax here is interchangeable.

The public sector DOES NOT PAY TAX? Creating public sector jobs does not increase tax take. The public sector consumes private sector tax/wealth.

That infrastructure is not created by the public sector though. It is created using private sector tax. Everything, absolutely every single digit of state spending is paid for by private sector.

You suggested the public sector paid tax. They do not my friend.

[2buyornot2buy]

We could I suppose have state run capitalism, where the government set up factories, mines, fisheries or whatever, but it would need to either produce something we could sell abroad, or substitute imports. I believe state owned and run forestry is the only remaining example of this. There's an opportunity - the Roads Service could plant trees along all the major roads or at motorway roundabouts - lot of unused land there - and harvest them in 30 years' time. By which time we'll need all the fire wood we can get, and we'll all be on bikes, if we don't get our economy sorted out.

Interestingly when the LEK construction VI group came up with the random construction multiplier, you know every £ spent on construction generates £1 zillion, they skipped over a figure showing forestry generates by far the most GDP per person employed. Little investment opportunity perhaps?

So maybe you have something there yada.

[yadayada]

Interestingly when the LEK construction VI group came up with the random construction multiplier, you know every £ spent on construction generates £1 zillion, they skipped over a figure showing forestry generates by far the most GDP per person employed. Little investment opportunity perhaps?

So maybe you have something there yada.

Indeed. I'll email the Roads Service tomorrow and suggest a lease of motorway verges and roundabout wasteland for the next 30 years., and get a spade and a few thousand Sitka Spruce. Set up a company to do this of course - how about "Woodstock"?

Suppose I should have kept that quiet.

Edited February 4, 2014 by yadayada

[yadayada]

I am sure there are other examples too where the state carries out a similar role to the private sector. the Post office was a very good example. I agree totally that substitute imports has the same net effect, or better than imports.

No. The Post Office generates no wealth.

Edited February 4, 2014 by yadayada

[BelfastVI]

No. The Post Office generates no wealth.

So the millions Amazon give them is not income or the sale of a service overseas?

[2buyornot2buy]

So the millions Amazon give them is not income or the sale of a service overseas?

Both services BVI, they recirculate the wealth. They do not create it.

The person that actually made the product to sell (as export) created the wealth.

Like Yada said,

Wealth can only be created if you're making it, growing it or digging it up

Edited February 5, 2014 by 2buyornot2buy

[BelfastVI]

Both services BVI, they recirculate the wealth. They do not create it.

The person that actually made the product to sell (as export) created the wealth.

Like Yada said,

Wealth can only be created if you're making it, growing it or digging it up

It is just too simple to look at it that way. Those digging, growing or making need sales people to sell their products, transport to move it and roads to carry it. They may even post it via Royal Mail. They will need book keepers and debt collectors to ensure they obtain the income. The state will need to regulate and if needed enforce the payments of debts to these hard working shovel men.

The hard working people with the spades also need fed and clothed and god forbid, perhaps houses.

it takes more than shovels and trowels to run an economy or create wealth. There is more involved in getting to market than shovels.

[2buyornot2buy]

It is just too simple to look at it that way. Those digging, growing or making need sales people to sell their products, transport to move it and roads to carry it. They may even post it via Royal Mail. They will need book keepers and debt collectors to ensure they obtain the income. The state will need to regulate and if needed enforce the payments of debts to these hard working shovel men.

The hard working people with the spades also need fed and clothed and god forbid, perhaps houses.

it takes more than shovels and trowels to run an economy or create wealth. There is more involved in getting to market than shovels.

You have missed the point again. It is very very simple and I'm not for one second suggesting we do away with our public sector completely but having a big public sector does not make us richer.

All those things you quoted are consuming the wealth of the people who dig, grow or make something.

The only reason they get fed, clothed or indeed " god forbid, perhaps houses" is because the person dug, grew or made something.

You suggested that public sector workers made a net contribution to the tax take. You said

The pay tax don't they.

No, they do not pay tax. They just receive less from the diggers, growers and makers. Every single bit of wealth comes from the diggers, growers and makers. You, every other service industry quoted and the public sector owe your livelihood to them. Without them your service would not exist.

Or the Londoners as the case is here in NI. We just take their wealth.

[yadayada]

It is just too simple to look at it that way. Those digging, growing or making need sales people to sell their products, transport to move it and roads to carry it. They may even post it via Royal Mail. They will need book keepers and debt collectors to ensure they obtain the income. The state will need to regulate and if needed enforce the payments of debts to these hard working shovel men.

The hard working people with the spades also need fed and clothed and god forbid, perhaps houses.

it takes more than shovels and trowels to run an economy or create wealth. There is more involved in getting to market than shovels.

No.

A primary industry generates wealth - farming, fisheries, manufacture. Tourism if you can persuade foreigners (only) to visit. Exported services - insurance, engineering consultancy, architecture.

Everything else is a service business and does not produce wealth. Our national wealth is not increased by hairdressers, no matter how good they are.

I'm in a service business.

The only actual contributory activity in it is what I bring in from clients down south. My hard work for northerners produces nothing.

I grow fruit and veg for home consumption and cut my own home grown firewood. These are my fundamental contributions to the wealth of NI.

Not very impressive is it?

Edited February 5, 2014 by yadayada

[BelfastVI]

No.

A primary industry generates wealth - farming, fisheries, manufacture. Tourism if you can persuade foreigners (only) to visit. Exported services - insurance, engineering consultancy, architecture.

Everything else is a service business and does not produce wealth. Our national wealth is not increased by hairdressers, no matter how good they are.

Ofcourse I agree hairdressing cannot create wealth for a country, perhaps the individual but you cannot classify everyone in the public sector in the same light.

We have moved from low grade exports (coal, linen etc) to high end (engineering machines, management, military), primarily as we cannot compete with the low pay eastern markets.To do that we need a highly skilled workforce. To get there we need the education system, which is largely a public sector industry.

It is argued that you need the highly skilled workforce and advanced infrastructure in a country to attract the manufacturing investment in the first place. Therefore the installation and maintenance of this infrastructure and education system is an interical part of the fabric of a wealth creating economy.

[2buyornot2buy]

It is argued that you need the highly skilled workforce and advanced infrastructure in a country to attract the manufacturing investment in the first place. Therefore the installation and maintenance of this infrastructure and education system is an interical part of the fabric of a wealth creating economy.

Chicken or the egg here.

To pay for the infrastructure you need the wealth.

You can't have infrastructure without the wealth. Unless of course you're happy to borrow from the countries that create wealth (china et al.).

Ever hear of apprenticeships? We certainly don’t need the current massively bloated University (service) sector. This is just a redistribution of the wealth.

A massive public sector is the biggest barrier to export led wealth creation. It increases cost and increase taxes for the wealth producers. They can’t compete.

Also manufacturing is down here. Services is up. Construction is up.

Take a guess at how this growth is all getting paid for?

[yadayada]

Ofcourse I agree hairdressing cannot create wealth for a country, perhaps the individual but you cannot classify everyone in the public sector in the same light.

We have moved from low grade exports (coal, linen etc) to high end (engineering machines, management, military), primarily as we cannot compete with the low pay eastern markets.To do that we need a highly skilled workforce. To get there we need the education system, which is largely a public sector industry.

It is argued that you need the highly skilled workforce and advanced infrastructure in a country to attract the manufacturing investment in the first place. Therefore the installation and maintenance of this infrastructure and education system is an interical part of the fabric of a wealth creating economy.

No again. Quite a lot of the UK's wealth is based on oil and gas. Scotch whisky is hardly high tech and it's doing well. The car industry is still important.

The UK is very good at arms, and has one of the world's biggest pharmaceutical industries. Quite important in NI too.

Military - does that include invading oil rich states? Because if it does, I have to agree it should produce wealth if you can keep the natives quiet.

In case you hadn't noticed, the trade balance has been negative for 31 years, and we're buried in debt. Apart from Germany with its engineering exports, most of Europe is in the same bind.

Education? Graduates in medicine, social science, law, media studies, psychology...etc..act as a drain on the national wealth.

Oh, well there's always more debt and quantitative easing.

Once it stops raining, I'm going out to prune my Bramleys and get some digging done. My contribution to national prosperity.

Edited February 5, 2014 by yadayada

[Shotoflight]

Nearly half of NI carers 'in debt'

http://www.u.tv/News/Nearly-half-of-NI-carers-in-debt/6966c361-173c-4e09-9473-da088513f857

Financial challenges are being endured by many of those who have been forced to give up or cut back on work to look after an older, disabled or seriously ill loved one.

This has been revealed in a year-long study by charity Carers Northern Ireland.

Spiralling costs of caring combined with cuts to support are being highlighted by the charity as causes of the hardship levels.

There are an estimated 214,000 carers in Northern Ireland.

The charity's research found

More than four in 10 carers (42%) were unable to afford utility bills

Almost half (46%) were in debt as a result of caring

One in seven adults in Northern Ireland said their work was negatively affected by caring

11% of adults in Northern Ireland, 151,811 people, had given up work to care at some point

Almost half (45%) of working-age carers are in a household with no-one in paid work

70% of carers in Northern Ireland are spending more than 10% of their income on fuel bills.

[Shotoflight]

Gino and NV: 150 jobs lost as NI clothing chain shuts

http://www.bbc.co.uk/news/uk-northern-ireland-26057333

Gino and NV had more than a dozen branches with a presence in most of Northern Ireland's large towns.

The shops closed last week when a liquidator was appointed to the Nath Bros Partnership, which operated the business.

Nath Bros Partnership has a registered office at the Mahon industrial estate in Portadown, County Armagh.

[Shotoflight]

Once a thriving shopping hub, now it's tough times for traders in boarded-up Ballymena - City of the 7 towers!!!!!

http://www.belfasttelegraph.co.uk/news/local-national/northern-ireland/once-a-thriving-shopping-hub-now-its-tough-times-for-traders-in-boardedup-ballymena-29980726.html

Local businessman Davis Wylie (33) recently shut his tattoo shop, Ballymena Ink, at the corner of Mill Street after three-and-a-half years.

"Mill Street is full of empty premises and it looks bad so I'm moving elsewhere in the hope of improving business," he said.

"Things are tough for traders in Ballymena.

"Footfall is definitely down and people don't seem to have any money to spend anymore."

On most other streets in the town it's a similar story of struggling shopkeepers, boarded-up buildings and constantly dwindling customers.

A veteran, locally based estate agent, who asked not to be named, said: "Retailing isn't what it was and I can't see the situation improving in the foreseeable future."

[Shotoflight]

Danske Bank: First annual profit in Northern Ireland since 2008

http://www.bbc.co.uk/news/uk-northern-ireland-26062789

Danske Bank in Northern Ireland made a pre-tax profit of £11.4m in 2013, compared to a loss of more than £58m in 2012.

It is the first time the bank has made an annual profit since the start of the financial crisis in 2008.

Danske said the improved performance was driven by reduced bad loan charges alongside a better underlying business.

Danske made a profit of just over £1m in 2008 but made a loss in every subsequent year until 2013.

The bank's chief executive Gerry Mallon said the 2013 performance puts the bank "12 to 18 months ahead" of where it thought it would be.

However, he said he was "not overjoyed" by the results and that there was still more to do.

The bank's underlying operating income increased by 4% year on year from £174m to £180m.

Loan charges

Total costs increased from £135m to £141m, though that included some one-off items. The bank said that its underlying cost base is falling.

Bad loan charges, mainly relating to property, fell from £153m to £48m.

The bank said it had a "record year" for business lending with over £450m in new and increased loans provided to business customers.

Almost half of that for was to "new to bank" customers.

Mr Mallon said that one of their new business customers is Norbrook Laboratories, the veterinary pharmaceutical company that is one of Northern Ireland's largest exporters.

The bank is expecting the Northern Ireland economy to grow by 2.4% in 2014.

Mr Mallon said that so far the recovery is being driven by consumer spending rather than business investment.

He added that a "big driver" of consumer confidence had been the stabilisation of the housing market.

[Shotoflight]

UK

Personal insolvencies fall to eight-year low

The number of people declaring bankruptcy continues to fall but experts warn official figures do not reflect "true scale" of personal debt

http://www.telegraph.co.uk/finance/10624010/Personal-insolvencies-fall-to-eight-year-low.html

Giles Frampton, vice-president of insolvency trade body R3, said the official statistics were "only the tip of an iceberg".

He pointed out that debt management plans (DMPs) were not included in the figures.

Mr Frampton said: "The significant barriers to entry to IVAs, DROs, and bankruptcy can often mean insolvent individuals have no choice but to enter a DMP, take out a payday loan, or don't address their debts at all.

"Until the government begins to monitor new DMPs, the true scale of personal insolvency in England & Wales will be hidden."

He said personal insolvency levels were still “astronomically high” compared to recent decades.

In 2013 around one in 445 adults became insolvent, compared to the annual average of around one in 1,400 adults over the past 25 years.

Mark Sands, personal insolvency partner at Baker Tilly, said: “Our own figures indicate that there continues to be a significant north-south divide with London registering only 15 personal insolvencies per 10,000 people, while the North East is double that figure at 30.

“There’s also a danger that low interest rates and increasing consumer confidence may tempt some to borrow more than they can afford to repay, so we might not be quite out of the woods yet.”

[Shotoflight]

http://www.newsletter.co.uk/news/business/business-leaders-call-for-export-boost-1-5861667

Business leaders in Northern Ireland have called for urgent action to boost exports.

The number of firms exporting has fallen to under 1,500 and the region is heavily dependent on just 10 large companies.

The Executive’s economic strategy prioritises export-led growth and has a target to increase the value of exports by a fifth by 2014/15. Mr Nodder said the number of businesses exporting goods has fallen from 1,700 in 2010 to just under 1,500 now.

He told Stormont’s Enterprise, Trade and Investment Committee that better partnership between government and the private sector was essential to make it easier for businesses to find timely support or advice.

“Growing Northern Ireland’s export base is critical to the future prospects of this economy and urgent action is needed by government to make this happen,” he added.

Northern Ireland has the smallest private sector across the UK, 2.3% of the UK total, and is dominated by small firms. Almost 60% of businesses employ less than 50 compared to 47% across the UK.

Many of the gains made in the size of the business community during the strong growth period of the early 2000s came from an increase in the number of sole traders.

Exporters make up less than 3% of businesses and half of manufacturing exports were accounted for by 10 companies, with the largest firms producing 70% of exports, the Chamber of Commerce said

http://www.irishnews.com/business/north-needs-urgent-action-on-export-plan-executive-told-1323350

Mr Nodder will tell the committee companies like his with a focus on exports are on the decline.

He will tell MLAs: "The economic strategy currently states that it prioritises export-led growth and has a target to increase the value of exports by 20 per cent by 2014/15.

"However, one year into that target exports have fallen by 1.2 per cent.

Edited February 7, 2014 by Shotoflight

[Shotoflight]

Northern Ireland visitor numbers up yet occupancy at hotels stagnant

http://www.belfasttelegraph.co.uk/business/news/northern-ireland-visitor-numbers-up-yet-occupancy-at-hotels-stagnant-29987901.html

Hotel room occupancy rates fell by 2% for the nine months to September and for bed and breakfast and guest house accommodation by 1%.

That is a result of the fact much of the increase in visitor numbers were accounted for by "persons visiting friends and relatives," the statistics bulletin said. "This group is less likely to stay in hotels."

Of all visitors, there was a 2% fall in the estimated number of overnight visits by external visitors for holiday purposes.

[Shotoflight]

The 'respected' PMI survey from (ahem!) The Ulster Bank suggests...

Purchasing Managers Index suggests NI recovery gaining momentum

http://www.bbc.co.uk/news/uk-northern-ireland-26089532

Despite the encouraging figures, the Northern Ireland economy is estimated to be still almost 10% smaller than its peak in 2007.

By comparison, the UK economy as a whole has made up almost all the output lost as a result of the recession, and is now less than 2% below its 2008 peak.

https://twitter.com/ramseconomics

Ulster Bank N.Ireland PMI: Construction sector sees pace of expansion ease from 56.3 Dec to 55.9 in Jan. New Business 54.9 Employment 51.8

Additionally, workers continue to get poorer every day as inflation continues to outpace wage increases

Edited February 10, 2014 by Shotoflight

[Shotoflight]

Fears over future of Belfast International Airport as long-haul plans to Toronto and Abu Dhabi stall

http://www.belfasttelegraph.co.uk/business/news/fears-over-future-of-belfast-international-airport-as-longhaul-plans-to-toronto-and-abu-dhabi-stall-29994635.html

Civil Aviation Authority (CAA) figures due out this week are expected to confirm that, in terms of air traffic, Northern Ireland has been stagnating for years. By contrast, Dublin Airport is booming.

And while Northern Ireland's new long-haul aspirations have been shelved, Dublin currently boasts four routes to Canada alone, and two to the Middle East.

BIA has only one long-haul route – a New York-Newark service – which was only saved three years ago after an 11th hour U-turn by Chancellor George Osborne on the crippling air passenger duty (APD) imposed on long-haul flights from the UK.

It is almost two years since the Belfast Telegraph revealed that there were high hopes of securing a direct route from BIA to Abu Dhabi.

Alastair Hamilton, Invest NI chief executive, said at the time "there is a fairly high chance it will happen" while Economy Minister Arlene Foster spoke of the benefits it would bring. But the route has failed to materialise, along with a new direct flight to Toronto which, it was hoped, would re-connect Northern Ireland with Canada.

Now politicians have been urged to find a way of making Northern Ireland more competitive in the air traffic market, the stagnation of which is having a debilitating effect on tourism and the local economy.

BIA remains the second biggest airport on the island of Ireland, but handles only around a fifth of Dublin's 20m passenger volume.

Since the devolution of long-haul APD to Stormont in 2012, not one major international carrier has opted for Northern Ireland.

[md23040]

Fears over future of Belfast International Airport as long-haul plans to Toronto and Abu Dhabi stall

Dublin airport can hardly be seen as roaring ahead. Business remains 18% below 2008 movements of 23million to just over 20.2 million in 2013. Albeit 2013 passenger traffic increased 6% on 2012.

Overall on a like for like basis Northern Ireland has over 7.4m passengers through DA, BIA and GBA and to equalise this to ROI business 7.4million divided by 1.8 (Northern Ireland pop) x 4.689m (ROI pop) would give 19.2m passenger movements. ROI Airports of Dublin, Shannon, Cork and Knock had 23.940m passenger movements in 2013 therefore overall Northern Ireland is 19.5% behind.

The main items affecting this are (and not exhaustive)

(i) Ireland attracts 6.986m oversea’s tourists whilst Northern Ireland only attracts 1.55m (1.03m GB with quite lot business travellers, 0.253m Europeans, 0.163 American and 0.104m other). So unless Northern Ireland can get rid of its sectarian issues, create better tourist product, with more to do, then it’s on a high to nothing.

(ii) Dublin is the main hub airport for the Island of Ireland. It is less than 1hour 30 minutes from the greater Belfast region that has a population of close to 1 million thereabouts. London Heathrow has loads more routes than let’s say Birmingham, and people will travel to Heathrow because of its critical mass, same with Dublin. Why would Emirates with daily flights daily to Dubai and Abu Dubai with good profit and 92% load factor decide to open a route out of Belfast and affect its already profitable service (Emirates has a stranglehold on Dubai). Likewise with daily flights from Dublin to Montreal and Toronto.

These are all the consequences of open market policy, with all island motorway connection to all major cities (except stroke city whose infrastructure remains pathetically still in the dark ages).

Edit - Ireland pop 4.589m

Edited February 10, 2014 by md23040

[BelfastVI]

Northern Ireland living standards 'had steepest fall in UK'

BBC link

The research by the Resolution Foundation, a left-wing think tank, uses a measure called GVA per head, that allows for a region-by-region comparison of living standards.

It found that between 2008 and 2013 GVA per head in Northern Ireland fell by 10% from £17,910 to £16,130.

The UK average was a 5.8% fall.

In the south-east of England the fall was just 3.3%.

Existing data suggests that on the whole Northern Ireland suffered a deeper and longer lasting recession than other parts of the UK, largely due to the dramatic property crash.

The most recent figures show the Northern Ireland economy is estimated to be still almost 10% smaller than its peak in 2007.

By comparison, the UK economy as a whole has made up almost all the output lost as a result of the recession, and is now less than 2% below its 2008 peak.

GVA per head is calculated by taking the income generated by businesses, minus the cost of goods and services used to create the income, and dividing that sum by the population.

Edited February 11, 2014 by BelfastVI

[Shotoflight]

Financial crisis has left 'permanent scar' on UK wages

Recession has caused an “unparalleled collapse in real wages”, Resolution Foundation report finds

http://www.telegraph.co.uk/finance/economics/10629416/Financial-crisis-has-left-permanent-scar-on-UK-wages.html

The financial crisis has left a "large permanent scar" on UK wages, with some salaries not expected to recover to pre-crisis levels until 2022, according to the Resolution Foundation.

The think-tank said the 2008 recession had caused an “unparalleled collapse in real wages” and any hope of closing the gap between current wage levels to where they would have been without the crisis was all but lost.

According to the Resolution Foundation, by 2019 - more than ten years after the crisis began - median incomes will still be 3.5pc below their pre-crisis peak. It said typical household incomes would remain anaemic for years, with median full time earnings for men not recovering to 2008 levels until 2022.

“Despite the strengthening recovery it looks like we’re set for several years of very weak income growth. It’s increasingly clear that the long downturn has permanently changed the course of living standards, with effects continuing to play out," said James Plunkett, director of policy at the Resolution Foundation.

“As things stand, the recovery rests on consumer spending. And that spending rests on a diminishing savings rate, not income growth. With so many households already struggling with their debts – even with rates still low—a savings-led recovery is not a happy prospect.”

"Today's nascent recovery is flying on the single engine of household spending power," the report said.

[BelfastVI]

Nama 'could sell Northern Ireland property loan portfolio'

BBC Link

A major financial institution is interested in buying Nama's entire loan portfolio in Northern Ireland, according to the Irish Times newspaper.

Nama is the Republic of Ireland's state controlled 'bad bank'.

It controls property loans originally made by Dublin-based banks, including loans worth about £1bn for NI property.

The report states that Pimco, a US-based investment management firm, has approached Nama with a view to buying the Northern Ireland portfolio.

No denial

In a statement, Nama said it "constantly reviews its portfolio to assess opportunities for maximising returns from loans or assets within the portfolio.

"In addition, it frequently receives approaches from investors expressing interest in acquiring loans or assets in its portfolio and reviews such approaches on an ongoing basis."

However the agency did not deny the Irish Times report.

Pimco, which is best known as a bond trader, manages about $2tn (£1.2tn) of assets around the world.

It has previously bought Nama assets in the Republic of Ireland.

Disposal strategy

Loan sales are a common way for banks to dispose of distressed property assets.

Lloyds has sold several large portfolios of loans that were originally made by its now defunct subsidiary Bank of Scotland Ireland.

Those deals have seen loans, which originally were made to Northern Ireland developers, sold to US investment funds such as Oaktree Capital.

Bank of Ireland has also sold a smaller number of loans to US firm Kennedy Wilson.

Nama has completed several large loan sales in the Republic of Ireland but so far its disposal strategy in Northern Ireland has mainly consisted of selling individual properties which have typically been repossessed.