Saturday, November 02, 2013

Ireland partition: a blight on economic development

By Theo Russell

THE ENORMOUS negative economic impact of the division of Ireland, and of the border itself, were highlighted at the “Towards a New Ireland” conference last month in London, in contributions by Sinn Féin MP Connor Murphy and the economist Michael Burke, author of the Socialist Economic Bulletin blog.
Both spoke of the almost total lack of reliable economic statistics for the north of Ireland, which Murphy described as “an economic basket case since the shipyards were closed down”.
Leaving aside the massive costs resulting from the duplication of services and administrative structures in the two jurisdictions, Murphy highlighted the economic blight imposed by the border in the adjacent districts and towns.
He said long-term planning in the border areas was rendered almost impossible by the constantly changing Sterling-Euro exchange rate which put off potential outside investors, and meant that “towns on either side of the border can prosper for a period, and then be wiped out by currency movements”.
Sinn Féin faces almost insurmountable problems in developing its economic strategy in both parts of Ireland due to the failure of the London and Dublin governments to provide proper and detailed statistics. Murphy said this means almost all economic analysis or planning, especially in the north, was “based on guesswork with no real basis”.
“Accurate figures on all revenue raised and actual expenditure specifically relevant to the north of Ireland are being deliberately withheld by the British Treasury, Excise and Customs, and conveniently ignored by successive DUP Finance Ministers,” he said.
Sinn Féin has also been unable to draw up proposals for a wealth tax in the Republic of Ireland, because the Department of Finance in Dublin had refused to provide the necessary statistics.
“The mantra,” as Murphy called it, of the prohibitive costs of re-unification, was based on “highly dubious guesstimates by the British Treasury, Unionist politicians, and partitions elements in the South of Ireland”.
Murphy said Sinn Féin had spent “quite a period of time” scrutinising the £10 billion subvention which the Treasury claims the Northern Ireland Executive receives from Westminster.
He said: “This actually contains up to £6 billion that you wouldn’t be required to spend in an indigenous all-Ireland economy. For instance we wouldn’t be helping fund the exploits of the British army, Imperial museums in England, Scotland and Wales, umpteen members of royalty, their entourages and their dozens of residences and the other myriad of areas that are simply to do with the British establishment”.
Economist Michael Burke pointed out since partition the North of Ireland’s economic standing had been transformed out of all recognition by the forces of global economic change. Today it is by far the poorest region in Britain.
At the time of Partition in 1921, per capita GDP in the north of Ireland was slightly higher than in the rest of Britain, while per capita GDP in the Republic was only 45 per cent of that in the north.
But by the turn of the 21st century per capita GDP in the Republic had overtaken that in Britain, while per capita GDP in the North fell to less than 80 per cent of that in the UK.
Even in 2012, after five years of economic crisis in the Republic, its per capita GDP was almost £4,000 higher than in Britain’s at £29,000, while that in the north was only £20,400.
Burke added that it is widely accepted that the Republic’s GDP was inflated by the tax accounting activities of multinational companies. “But,” he said, “so too is Britain’s GDP inflated, though less discussed, through its related network of ‘offshore’ financial centres.
“If undistorted measures such as value added in industry are used, the same conclusion is drawn: per capita output in the Republic of Ireland surpassed Britain before the turn of this century”.
Burke attributes the north of Ireland’s economic failure to its status as a British colony. “Colonies always face two key problems in relation to the metropolitan centre, relating to the relative lack of investment and ‘closed’ trade patterns. As a result the North has not been integrated into the world economy through direct trade.”
Just as the border itself deters investors, Burke said: “The current status of the north of Ireland as a British province, far from its main markets in Europe and elsewhere, means that only British companies are likely to invest there.”
Even in times of economic growth and prosperity, partition and the border would be a brake on the development of Ireland’s economy, but they make recovery from the current economic recession a far harder task.
The message from last week’s conference was loud and clear: the sooner the border goes, the better off the people of Ireland will be.

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