End of Year Report on the Northern Ireland Economic Pact

A few weeks back school pupils across the land got their end of year of reports and PwC says today it’s the turn of the First and Deputy First Ministers to meet the Headmaster.

They’re in Number 10 to discuss how the Northern Ireland Economic Pact has fared one year on.

That Economic Pact was announced at the time of the G8 Conference in Fermanagh in June 2013.

Whilst in part a bit of a holding exercise, as the final decision on whether to devolve Corporation Tax powers was postponed, the Pact contained a range of useful measures.

Most of the individual initiatives, such as £100m of extra borrowing for community cohesion measures, £20m of R&D support, reform of tourist visas and extension of Invest NI’s powers to give grant aid, collectively had the potential to boost the Northern Ireland economy.

PwC chief economist, Dr Esmond Birnie, forecasts what we are likely to hear today:

• First, in the best end-of-year-report tradition, probably some reflection on how the Northern Ireland economy performed over the last year. 2013 was actually a good year in many respects. Recovery began and according to some measures, employment grew by 15,000 or over 2%. Invest NI had a record year in terms of investment and job promotions. But there’s a caveat - not all of this economic progress can be attributed to the Pact - much of it would have happened anyway given the cyclical upswing in the economy, and the pressure to get inward investment projects approved before EU state aid reductions applied.

• Second, we could see some announcements relating to the Pact. Perhaps shared housing projects funded by the borrowing power. Also, a breakthrough in terms of greater transparency in the Northern Ireland banking sector. For the first time, data will be published relating to how much credit is being supplied by the banks here. This is likely to show that borrowing by small businesses has increased.

• And some other victories may be noted; the EU has agreed that some state aids can continue to be granted in Northern Ireland; and a common tourist visa scheme to include Northern Ireland travel for visa holders entering the Republic of Ireland.

Esmond Birnie says:

“So, what should the end of year report say? Probably “Solid progress”, but also maybe a postscript of, “…could do better”.

“Why? Well, there’s a lot of devolution in the air.  The Heseltine report recommending devolution to the English regions has been bolstered by recent speculation that much more spending power and decision making responsibility could actually be heading for the regions and cities in England.

“Add further devolution in Wales following the Silk Commission and the likelihood that so-called ‘devo-max’  - a wholesale devolution of fiscal powers – could follow if Scotland votes ‘no’ in September’s independence referendum.

“That means Northern Ireland is the only region of the UK to have missed out on the opportunity to have a thorough and independent consideration of whether the Assembly should have much wider fiscal powers than just corporation tax devolution that’s been requested.”