Analysis By Edward Ferrin – Business and Economics Editor
The Chancellor of the Exchequer, Rishi Sunak, will publish his budget plans later this year. He must tell the country how much we must bear the brunt of recession. The sad reality is that the economy is facing choppy waters for the foreseeable future. Northern Ireland will face the same crisis as those in Great Britain. The Westminster government and their devolved partners now have the challenge to find the “least-worst” option to solve the looming crisis.
Who has fared the worst from the past few months? Those in receipt of Universal Credit. They have now lost their £20 “uplift” by the Conservatives in Westminster. As well as them, NHS nurses and staff have received a pay rise which was significantly less than demanded, with a dismal 3%, and workers now off furlough are in jeopardy of losing their jobs which were once safe a few years ago. The aftermath of the pandemic has shaped the economy into a game of winners and losers – the rich the winners and the poor the losers.
Stormont has not got the fiscal powers which are needed to “protect” Northern Ireland from the tough financial strain being put on the rest of the UK. MLAs are still recovering from the fiscal blunder called RHI; but could devolved government here deliver some economic protection against further recession on the public purse? Stormont has recently appointed Richard Ramsey as the head of a new budget oversight body, with some calling it “Glentoran signing Lionel Messi!”
Mr Ramsey’s job is simple: make Northern Ireland fiscally sustainable. His task won’t be easy as Northern Ireland’s subvention from the UK Treasury has never been made back since the mid-1920s. He must report whether Stormont could handle the economic crisis better if it took control of regional taxes. Recession is taking shape – inflation is sucking the life out of the economy! Prices are up, sales are running slow, and years of saving up have been made worthless within the space of two years.
If the government is to learn anything from the past few months, it must be that the economy has widened the gap between rich and poor! COVID-19 and lockdowns have shown us how rigid our economy is, with jobs vulnerable to recession. But is the NHS, education and the climate crisis at the mercy of the economy and the deficit? Northern Ireland has suffered from years of austerity, economic stagnation and a “brain drain” of talent abroad.
Who have lost out most in the economic game since the beginning of the pandemic? Nurses who worked throughout lockdowns still receive poor wages and a dismal pay rise? Students who didn’t attend university on campus still paying tuition fees in full? People working in care homes on low wages, long hours and little flexibility are now forced to pay higher national insurance contributions than before? The economy is putting burdens on the less-well off and in the process, risks putting more people into poverty and recession.
Are there solutions to our troubles in Northern Ireland? Stormont has little power to avoid joining “step by step” with Westminster’s fiscal policies. That said, Stormont may be able to protect Northern Ireland from its toughest measures. The Communities Minister, Deirdre Hargey, has been called upon to find a solution to keep the £20 “uplift” for Universal Credit – it might help protect more people being forced to live off foodbanks or no heating during the winter weather. Stormont might yet be able to stand against tough economic pressures if there are enough resources to sustain it!
We face tough decisions ahead in economic matters. We will have to find a way of mitigating economic woes, promoting growth and investment and protecting ourselves from future threats from health and recession. Stormont might just provide Northern Ireland with an answer, if it was given much more responsibility over finance. It may prove the difference between job growth or loss and economic boom or bust! For the time being, Northern Ireland will remain on the losing side of the economic battles in the UK!