North-south relations after the boom: the impact of the credit crunch on mutual relations and understandings


NORTH-SOUTH RELATIONS AFTER THE BOOM, THE IMPACT OF THE CREDIT CRUNCH ON MUTUAL RELATIONS AND UNDERSTANDINGS: KEYNOTE SPEECH



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NORTH-SOUTH RELATIONS AFTER THE BOOM, THE IMPACT OF THE CREDIT CRUNCH ON MUTUAL RELATIONS AND UNDERSTANDINGS:
KEYNOTE SPEECH

Jeffrey Donaldson, MP, MLA

I


Thank you for your kind introduction.

Good evening Ladies and Gentlemen.

I am delighted to join you here today in Newman House to discuss this evening’s theme of North-South relations after the boom and the impact the credit crunch will have on mutual relations and understandings.

For my address I would specifically like to examine how the current economic downturn in the Republic of Ireland is likely to impact on Northern Ireland.

I don’t need to tell you that these are challenging times. Just 18 months ago, who could believe that the economic situation could have been transformed so quickly. The international economic outlook still looks pessimistic as the United Nations (UN) has recently reported that the world’s economy faces its worst downturn since the Great Depression.

The UN has also predicted that “developed” economies in total will shrink by up to 1.5% in 2009. Though I imagine you would be happy with that negative growth here.

The Managing director of International Monetary Fund said in March that the economic downturn would be more severe than previously thought, with global growth to slow below zero this year—the worst performance in most of our lifetimes. Continued de-leveraging by world financial institutions, combined with a collapse in consumer and business confidence, is depressing domestic demand across the globe, while world trade is falling at an alarming rate and commodity prices have tumbled.

With economic conditions globally worsening and the economies in Northern Ireland and the Republic of Ireland in recession, these are indeed challenging times. Both of our economies look to be experiencing one or more of the following issues:



  • a general slowdown with associated redundancies;

  • business and consumer confidence waning;

  • financial institutions under threat;

  • a slowing housing market;

  • rising unemployment.

As regards the gloomy predictions, Northern Ireland’s economy is forecast to contract in 2009 by 1.5 per cent according to the March forecast made by the First Trust Bank; while the Economic and Social Research Institute has recently forecast the Republic of Ireland to contract by 3.9 per cent in 2009. However, the predictions for the Republic appear to be getting even worse as an article in the recent Economist magazine predicted the downturn to be more severe with a contraction at 6.5 per cent this year.

Clearly the Republic’s downturn is predicted to be a lot more severe than that in Northern Ireland. For example, unemployment south of the border now stands at 7.7% compared to 5.7% in Northern Ireland. The claimant count measure in the Republic though is a lot higher at 10.4%. Official statistics now indicate that the Republic’s economy shrank by 7.5% in the last three months of 2008 compared to the same period in 2007.

According to the latest figures, the numbers unemployed in the Republic, as measured by the ILO definition, have risen by around 70,000 persons over the last year.

The rise in Northern Ireland was 10,000. The increase in benefit claimants in Northern Ireland was around 18,000 seasonally adjusted over the last year to February 2009. Unemployment in Northern Ireland currently stands at 46,000 persons looking for work whereas in the Republic it has reached nearly 171,000.

Employment in Northern Ireland has fallen by around 18,000 over the last year whereas in the Republic, it has decreased by close to 87,000.

The construction industry has been particularly badly hit especially in the Republic of Ireland. For example in the Republic of Ireland, construction employment has fallen to around 233,000, a loss of close to 46,000 jobs over the last year—equal to a contraction of 16.5 per cent in employment. Construction output suffered a 24% fall in output, the biggest fall on record.

In Northern Ireland construction employee jobs fell to around 39,600, a loss over the year of around 5,000 jobs or a contraction of 11 percent. NI construction output fell by 5% in the year ending September 2008.




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