Economic development the challenge of the new normal

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Economic development the challenge of the new normal Neil Gibson, Director of Regional Services 24th November 2010

Overview The new normal globally The new normal in Northern Ireland Inequalities and imbalances New normal scare resources, but rising pressures The challenge of building sustainable economies 2

The new normal globally

A global recession (but with different patterns) GDP and job losses by country, 2008-2012 GDP growth year on year (%) Employment change (000s) Employment change (%) 2008 2009 2010 2011 2012 2008-10 2008-10 United States 0.0-2.6 2.7 2.5 3.5-6260 -4.3 Japan -1.2-5.2 2.5 0.9 2.1-1300 -2.0 China 9.6 9.1 10.1 9.2 9.1 10170 1.3 India 7.4 6.7 8.2 8.3 9.0 20 3.6 Eurozone 0.3-4.0 1.7 1.5 1.7-3500 -2.4 Germany 0.7-4.7 3.4 2.2 1.7 180 0.5 France 0.1-2.5 1.7 1.8 2.0-340 -1.3 Italy -1.3-5.1 1.0 0.8 1.1-470 -2.0 Spain 0.9-3.7-0.3 0.4 0.8-1800 -2.9 UK -0.1-4.9 1.9 2.2 2.7-910 -8.9 Ireland -3.6-7.6-1.5 1.1 1.9-250 -11.8 NI -0.7-4.8 1.0 1.6 2.1-30 -3.4 4 Source: Oxford Economics

Debt is an issue (fortunately in NI it is not debt!) General government balance as a % of GDP, 2010-50 - 40-30 - 20-10 0 General government balance % GDP (2010) Source: Ernst & Young Economic Eye Luxembourg Malta China Slovenia Cyprus Finland Germany India Italy Belgium Austria Slovakia Netherlands France Japan Portugal Greece Spain UK US ROI (excluding bail out) ROI NI 5 Source: Oxford Economics

And re-balancing will have a long term impact % of GDP 80 70 60 50 40 30 20 10 0 UK Government expenditure and debt stock, 2000-2020 Government Expenditure General government net debt Forecast 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 6 Source: Oxford Economics

But recovery is underway World trade flows (% change year on year) 20 15 10 5 0-5 - 10-15 - 20-25 2 1.5 International trade flows, 2000-2020 Forecast UK GDP growth, 2000-2020 Forecast 7 Source: Oxford Economics UK GDP growth (% change year on year) 1 0.5 0-0.5-1 - 1.5-2 - 2.5-3 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

However Ireland could be falling back % quarterly 6 Quarterly GDP % change, UK and ROI, 2005-2010 10-year government borrowing interest rates, UK and ROI, 1993-2010 10 4 ROI UK 9 8 ROI UK 2 7 6 0 % 5-2 4 3-4 2 1-6 2005 2006 2007 2008 2009 2010 Source: CSO, ONS 0 Jun- 93 Apr- 94 Feb- 95 Dec- 95 Oct- 96 Aug- 97 Jun- 98 Apr- 99 Feb- 00 Dec- 00 Oct- 01 Aug- 02 Jun- 03 Apr- 04 Feb- 05 Dec- 05 Oct- 06 Aug- 07 Jun- 08 Apr- 09 Feb- 10 Source: Central Bank of Ireland, Bank of England Ireland employment returns to Q4 2007 peak of 2,149,000 in Q3 2024 GDP returns to peak in Q2 2016

A new normal is emerging Growth is less dependent on consumers and government in the west Meaning exports crucially important But the emerging nations do depend on western purchases So the position is fragile Re-balanced economies are emerging (trade, fiscal, components of growth) The uncertainties over banking in Ireland further highlight just how uncertain conditions and recovery are The problems in Ireland will potentially have a major impact on Northern Ireland 9

The new normal in Northern Ireland

The end of a golden era in the labour market Employees in employment (000s) 750 730 710 690 670 650 630 610 590 570 550 Employees in employment, NI, 1995 2010 Loss of 32,700 jobs to date, returning to 2005 levels Mar- 95 Sep- 95 Mar- 96 Sep- 96 Mar- 97 Sep- 97 Mar- 98 Sep- 98 Mar- 99 Sep- 99 Mar- 00 Sep- 00 Mar- 01 Sep- 01 Mar- 02 Sep- 02 Mar- 03 Sep- 03 Mar- 04 Sep- 04 Mar- 05 Sep- 05 Mar- 06 Sep- 06 Mar- 07 Sep- 07 Mar- 08 Sep- 08 Mar- 09 Sep- 09 Mar- 10 Source: QES, seasonally adjusted 11

Little surprise as to the sectoral pattern Employment change per sector, NI, 2008-2010 2008-2010 000s % Agriculture 3.9 11.1 Extraction - 0.5-20.9 Manufacturing - 9.4-10.0 Utilities - 0.6-24.5 Construction - 13.9-18.1 Distribution & retail - 9.1-6.1 Hotels & restaurants 2.9 6.3 Transport & communications 1.5 4.1 Financial services - 1.4-6.8 Business services - 8.9-9.3 Public admin. 0.1 0.1 Education 3.1 4.2 Health 1.5 1.3 Other personal services 0.9 2.1 Total - 29.8-3.4 12 Source: Oxford Economics

Public sector concentration leaves NI exposed Public sector employment per 1,000 jobs and 1,000 people, UK regions, 2010 Public admin and defence employment per 1,000 jobs and 1,000 people, UK regions, 2010 350 300 250 Per 1000 jobs Per 1000 people 90 80 70 60 Per 1000 jobs Per 1000 people Per 1000 200 150 100 Per 1000 50 40 30 20 50 10 0 North East Northern Ireland Wales Scotlands North West Yorkshire & Humber West Midlands South West UK East Midlands South East East London 0 North East Northern Ireland Wales Scotlands North West South West UK Yorkshire & Humber London East Midlands West Midlands East South East Note: Public sector is defined as public admin and defence, education and health sectors Source: Oxford Economics 13

Unemployment a major concern Claimant Count, (000 s), NI, 1990-2010 120 Unemployment (000s) 100 80 60 40 20 Rise of 36,000 claimants 0 Jan- 90 Mar- 91 May- 92 Jul- 93 Sep- 94 Nov- 95 Jan- 97 Mar- 98 May- 99 Jul- 00 Sep- 01 Nov- 02 Jan- 04 Mar- 05 May- 06 Jul- 07 Sep- 08 Nov- 09 September 2010 = 58500 Source: Claimant Count, NOMIS 14

At least 2020 before recovery to peak employment Total employment, NI, 1990-2020 Employment (000s) 900 850 800 750 700 Forecast 2020 until 2008 peak is reached 650 600 15 Source: Oxford Economics

Business services key to the (jobs) recovery 16 Source: Oxford Economics Total employment by sector, NI, 2010-2020 Change 2010-2020 (000's) Agriculture -4.8 Extraction -0.4 Manufacturing -12.4 Electricity -0.2 Construction 0.5 Wholesale and retail 10.4 Hotels and restaurants 6.7 Transport, storage and comm. 4.4 Finance 0.3 Business 23.2 Public admin -7.7 Education -2.8 Health 4.2 Other services 8.0 Total 29.3

Public sector cuts will hurt (but not as much as some suggest) Total public sector employment (000s) Total public admin employment (000s) 17 Public sector employment, NI, 2010-2020 280 270 260 250 240 230 220 210 200 190 180 70 65 60 55 50 45 40 1990 1992 1990 1992 Forecast 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Extreme scenario Public admin employment, NI, 2010-2020 Source: Oxford Economics Forecast Extreme scenario 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2016 2018 2020 2018 2020 Alternatives exist: Tax rises Wage control Procurement cost control Part-time working / job sharing Selling assets Out sourcing Other investment (esp. capital)

Public finances mean further subvention unlikely Fiscal deficits, 2009/10 Net Balance ( bn) % of GVA North East -13-32 North West -24-21 Yorkshire & the Humber -17-20 East Midlands -9-12 West Midlands -16-18 Eastern -5-4 Greater London -2-1 South East 1 1 South West -15-16 Wales -14-34 Scotland -14-14 Northern Ireland -11-41 UK -139-12 Source: Treasury, Oxford Economics 18

Unemployment a long term concern (but how high?) 120 Total unemployment, NI, 1990-2020 100 80 60 40 20 Unemployment base Constrained public sector Public sector cull 44,000 rise from trough returning to mid 1990 s levels (base outlook!) 0 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 And what of welfare reform? 19 Source: Oxford Economics How might this impact?

With migration a key unknown Total migration, NI, 1990-2020 12 10 Forecast 8 Total migration (000s) 6 4 2 0-2 - 4-6 - 8 20 Source: Oxford Economics

But opportunities abound The world is expected to growth by 3.7% per annum over the next decade,.0001% of this per annum would be 5% growth in NI Export markets have been doing well and are likely to continue doing so as world grows Scarcity of resources brings opportunity to agri, to renewable energy, even to near shore manufacturing in certain cases Aging population means silver dollar will be a huge market Pharma and activities related to health, cost of health and delivery of healthcare a major market Tourism also presents opportunities as a growing world and under pressure local consumers (though cost of travel and new markets lack of Irish / UK connection a challenge) Professional services and finance, despite the press, likely to be mainstays of job creation and offer real potential (and could use civil service labour?). Will outsourcing revolution occur in public services as it has in industry before it? NI has scope to raise additional revenue as it is relatively modestly taxed (See domestic rates, business rates, red diesel, water, travel) But must be responsible for its actions and think of ways to pay for what it needs Additional money from the UK taxpayer is unlikely and, in our view, largely unjustifiable 21

Inequalities and imbalances

NI local areas amongst the most affected Top 20 unemployment rate increases, UK region LADs, Jan 08 Sep 10 PP change Jan 08 - Sep Region 10 Limavady N. Ireland 4.5 Newry and Mourne N. Ireland 4.3 Derry N. Ireland 3.8 Dungannon N. Ireland 3.6 Armagh N. Ireland 3.4 Belfast N. Ireland 3.4 Omagh N. Ireland 3.4 Craigavon N. Ireland 3.2 Magherafelt N. Ireland 3.2 Cookstown N. Ireland 3.1 Ballymoney N. Ireland 3 Strabane N. Ireland 3 North Lanarkshire Scotland 2.8 Down N. Ireland 2.8 Kingston upon Hull, City of Yorks & Humber 2.7 Glasgow City Scotland 2.7 Carrickfergus N. Ireland 2.7 Hartlepool North East 2.6 Sandwell West Midlands 2.6 Clackmannanshire Scotland 2.6 23 Source: NOMIS Claimant Count, Oxford Economics

Low skills bare the brunt Unemployment by occupation, NI, September 2010 9 : Elementary Occupations 25% UK = 30% 1 : Managers and Senior Officials 2% 2 : Professional Occupations 4% 3 : Associate Prof essional and Technical Occupations 5% 4 : Administrative and Secretarial Occupations 9% 24 8 : Process, Plant and Machine Operatives 13% UK = 10% Source: NOMIS Claimant Count 7 : Sales and Customer Service occupations 14% UK = 20% 5 : Skilled Trades Occupations 22% UK = 11% 6 : Personal Service Occupations 6%

With many areas suffering badly Unemployment rate, Sep07 Sep10 9 Unemployment rate (%) 8 7 6 5 4 3 2 1 0 Derry Limavady Strabane Belfast Newry and Mourne Source: NOMIS Claimant Count, Oxford Economics 25 Moyle Omagh NI Armagh Ballymoney Coleraine Craigavon Dungannon Down Fermanagh Cookstown Carrickfergus Lisburn Magherafelt Newtownabbey Ards Larne Antrim Ballymena Banbridge UK North Down Castlereagh Sep-10 Sep-07

Low employment rate adds further complexity 26 Source: Oxford Economics Resident employment rate and scenario, NI DCs, 2010 Resident employment rate Jobs required to achieve 75% rate Jobs required as % of working age population Antrim 73 0.7 2 Ards 71 2.0 4 Armagh 67 2.9 8 Ballymena 71 1.4 4 Ballymoney 73 0.4 2 Banbridge 73 0.5 2 Belfast 63 20.9 12 Carrickfergus 73 0.4 2 Castlereagh 81 0.0 0 Coleraine 74 0.3 1 Cookstown 57 4.2 18 Craigavon 72 1.6 3 Derry 57 12.7 18 Down 69 2.7 6 Dungannon 65 3.6 10 Fermanagh 61 5.4 14 Larne 71 0.7 4 Limavady 51 5.2 24 Lisburn 72 2.1 3 Magherafelt 63 3.4 12 Moyle 68 0.7 7 Newry and Mourne 63 7.6 12 Newtownabbey 71 1.9 4 North Down 71 2.1 4 Omagh 67 2.7 8 Strabane 61 3.4 14 Northern Ireland 67 87.3 8 Note: areas more than 10% required shaded in pink.

Wide disparities forecast to continue 27 Source: Oxford Economics Employment job growth, NI District councils, 2010-2020 Job change 2010-2020 Return to peak Antrim 2.6 2013 Ards 0.1 >2025 Armagh 0.2 >2025 Ballymena 0.2 >2025 Ballymoney 0.4 2020 Banbridge 0.7 2016 Belfast 12.1 2018 Carrickfergus - 0.3 >2025 Castlereagh 1.8 2015 Coleraine - 0.5 >2025 Cookstown 0.1 >2025 Craigavon 2.8 2015 Derry 2.3 2020 Down - 0.6 >2025 Dungannon 1.2 >2025 Fermanagh - 0.4 >2025 Larne - 0.1 >2025 Limavady - 0.7 >2025 Lisburn 3.1 2016 Magherafelt - 0.5 >2025 Moyle - 0.1 2010 Newry and Mourne 3.1 2015 Newtownabbey 1.0 >2025 North Down 1.3 2015 Omagh - 0.4 >2025 Strabane 0.0 >2025 NI 29.3 2020

Who is available for high value added jobs? 80 Number and skills profile of non-employed, NI DCs, 2010 28 000s 70 60 50 40 30 20 10 0 Belfast Derry Newry & Mourne Source: Labour Force Survey, Oxford Economics Lisburn Craigavon Fermanagh Ards Dungannon Newtownabbey Down North Down Armagh Omagh Ballymena Limavady Cookstown Strabane Magherafelt Coleraine Antrim Banbridge Castlereagh Carrickfergus Total non-employed Non-employed graduates Total non-employed in NI: 361,600 of which 11.3% graduates Ballymoney Larne Moyle

Why skills matter Scatter plot of wages vs. graduates, 2009 Average (mean) weekly wage, 1400 1200 1000 800 600 400 200 GB LA's NI DC's Linear (GB LA's) Linear (GB LA's) Strabane Moyle Kensington and Chelsea Elmbridge Limavady City of London Wandsworth Cambridge R 2 = 0.531 29 0 0 10 20 30 40 50 60 70 80 90 Graduate concetration, % Source: ASHE, APS, Oxford Economics

Skills levels a concern Skill levels of working age population, NI DC s, 2007-2009 30 % with degree or above % no quals Antrim 35.3 23.1 Ards 20.0 19.9 Armagh 22.6 23.6 Ballymena 22.5 23.2 Ballymoney 16.7 31.0 Banbridge 22.6 20.3 Belfast 33.1 21.7 Carrickfergus 25.7 16.8 Castlereagh 34.1 16.7 Coleraine 21.9 21.4 Cookstown 21.7 35.0 Craigavon 27.3 24.3 Derry 21.7 29.3 Down 27.9 18.9 Dungannon 17.1 33.2 Fermanagh 25.7 27.9 Larne 27.7 17.4 Limavady 31.0 39.7 Lisburn 26.9 21.4 Magherafelt 26.9 27.6 Moyle 28.1 25.9 Newry 24.1 23.9 Newtownabbey 27.7 15.8 North Down 28.6 12.8 Omagh 26.7 30.7 Strabane 16.0 33.8 Northern Ireland 25.4 22.3 Source: Labour Force Survey, Oxford Economics Economy to become increasingly skills hungry Future growth in high value added jobs Areas that have suffered the most may continue to suffer

Once deprived, always deprived? 31 Source: NINISv Deprivation Index ranking, NI DCs, 2001, 2005 and 2010 2001 2005 2010 Antrim 22 15 21 Ards 24 23 24 Armagh 14 13 19 Ballymena 19 20 20 Ballymoney 12 14 15 Banbridge 23 24 22 Belfast 2 2 2 Carrickfergus 18 21 17 Castlereagh 25 25 25 Coleraine 17 17 12 Cookstown 7 9 8 Craigavon 9 7 7 Derry 1 3 3 Down 16 16 13 Dungannon 10 10 11 Fermanagh 11 11 16 Larne 15 12 10 Limavady 8 6 4 Lisburn 20 19 14 Magherafelt 13 22 23 Moyle 5 5 6 Newry 4 4 5 Newtownabbey 21 18 18 North Down 26 26 26 Omagh 6 8 9 Strabane 3 1 1 Note: Pink shading = 3 most deprived Yellow shading = 3 least deprived

Industrial areas expected to suffer in jobs terms % employment in production sectors, NI DCs, 2010 % of total employment 35% 30% 25% 20% 15% 10% 5% 0% Larne Dungannon Moyle Magherafelt Cookstown Fermanagh Banbridge Armagh Ballymoney Craigavon Ballymena Limavady Strabane Newry and Omagh Ards Down Carrickfergus Lisburn NI Antrim Coleraine Newtownabbey Derry Castlereagh North Down Belfast % employment in financial and business services sectors, NI DCs, 2010 25% Note: Production sectors = agriculture, extraction, utilities and construction % of total employment 20% 15% 10% 5% 0% 32 Source: Oxford Economics Belfast Ballymena Derry NI North Down Craigavon Lisburn Castlereagh Newtownabbey Coleraine Antrim Armagh Ards Dungannon Fermanagh Carrickfegus Ballymoney Newry Limavady Strabane Omagh Banbridge Down Larne Cookstown Maghera Moyle

Economic pressures weigh heavily on inequalities Economic direction of travel is towards higher value added skills, potentially widening economic inequalities (agri and enviro tech and tourism do act as a partial break on this trend) The recession has left many people outside of the labour market who may well reside there for a very long time The global market is such that any opportunities for employment will be taken by someone there may not be enough time for local labour to engage The financial world is extremely challenging, with twin pressures of spending cuts and consumer pressures likely to weight heavy on households Moreover capital and spending programmes will be under extreme pressure Welfare reform will also potential have a sever impact (though do not assume this will be negative) More than ever it is Northern Ireland s choice what do we want to spend on and to prioritise?

New normal scare resources, but rising pressures

Twin pressures on governments and consumers GDP and its components (average % growth), UK Pre- recession (1997-07) Recession (2008-10) Post recesssion (2011-20) Consumer spending 3.4-0.5 2.2 Investment 5.0-5.9 4.5 Govt consumption 2.2 1.4-0.6 Exports 4.7-1.8 5.7 Imports 6.4-1.9 4.1 GDP 2.9 1.1 2.5 Reduction in government consumption A more sustainable current account balance Source: Oxford Economics 35

Credit limits strict (too strict?) UK: Credit availability survey % balance tightening (-)/loosening (+) credit 30 20 UK: Secured borrowing % year % month 16 % year 1.6 14 (LHS) 1.4 10 0-10 -20-30 -40-50 -60 Corporate Sector Corporate Sector Unsecured household 07Q3 08Q1 08Q3 09Q1 09Q3 10Q1 10Q3 Source : Oxford Economics/Haver Analytics 12 10 8 6 4 2 0 1996 1998 2000 2002 2004 2006 2008 2010 Source: Haver Analytics % month (RHS) 1.2 1.0 0.8 0.6 0.4 0.2 0.0 36

Consumers to reduce debt UK: Personal debt and saving ratio % income 14 12 Saving ratio (LHS) % income 180 F'cst 160 10 8 6 4 2 0 Debt-income ratio (RHS) 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 Source: Oxford Economics 140 120 100 80 60 37

Wider pressures Household expenditure, UK, 2009 Wheat prices, world, 1990-2009 UK household expenditure as a percentage of total (%) Lowest 10% Highest 10% All households Food & non-alcoholic drinks 17 7 11 Alcoholic drinks, tobacco & narcotics 4 2 2 Clothing & footwear 5 4 5 Housing, fuel & power 21 8 11 Household goods & services 6 6 6 Health 1 1 1 Transport 9 14 14 Communication 4 2 3 Recreation & culture 11 13 13 Education 1 3 1 Restaurants & hotels 7 9 8 Miscellaneous goods & services 6 7 8 Other expenditure items 9 24 18 Total 100 100 100 Wheat prices (1990=100) 300 250 200 150 100 50 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: Family expenditure survey Source: UNCTAD, UNCTADstat 38

House price correction to continue House price to wage ratio, NI and UK, 1990-2020 15 13 Forecast The average HP/wage ratio in NI pre boom (1993-03) was 4.8 House price to wage ratio 11 9 7 5 At peak, the HP/wage ratio was 12.7 in NI The 2010 HP/wage ratio is 7.9 3 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Implications for confidence and spending 39 Source: Oxford Economics

Oil demand to continue (and prices will rise) Global: Oil demand and price US$ pb 140 120 100 80 60 40 World oil demand (RHS) Oil price (LHS) F'cast mbd 110 100 90 80 70 Global oil intensity 2008=100 140 120 100 80 60 40 20 60 20 Forecast 0 197319771981198519891993199720012005200920132017 Source: Oxford Economics 50 0 1995 1999 2003 2007 2011 2015 2019 Source : Oxford Economics Global oil demand will continue to rise, as will prices. Global oil intensity suggests that despite the rising demand, world GDP will become less dependent on oil over time, as alternatives are sought and found. 40

Increase in older population Official population projections under 16s and over 65s, NI, 1992-2020 Population (000s) 450 400 350 300 250 200 150 100 50 0 Under 16 Over 65 Forecast Source: ONS 41

Care of the elderly to present opportunities (and problems!) Employment in health and social care, NI, 1990-2020 Working age people per older person, NI, 1990-2020 Health and social employment, 000s 140 130 120 110 100 90 Forecast Working age people per older person 5.0 4.8 4.6 4.4 4.2 4.0 3.8 3.6 3.4 3.2 Forecast 80 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 3.0 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Employment in health and social care sector forecast to grow by almost 4,500 jobs by 2020 Source: Oxford Economics There are currently 4.5 working people per older person (where an older person is defined as 65+) this is forecast to drop to 3.6 by 2020 Source: ONS / Oxford Economics 42

Challenges Private sector to drive growth Export performance is key Economic inequalities will exist and potentially widen Government spending limited to address them So we face choices of how to best use scarce public spending: Local regeneration? Community services? Education and training? Infrastructure? Front line (Doctors, nurses, teachers etc)? Support private sector growth?

The challenge of building sustainable economies

An economic crossroads The economy is at a crucial stage in its development The debt led conditions of 2007/08 are not likely to return and the pressures of spending cuts are on their way Time to re-orientate the economy in a way long aspired to, never implemented But economic policy has been focussed on the preservation of the block grant this is both dangerous and unamibitious Structure is a key problem and means talking to existing stock of businesses is necessarily flawed (structure goes a long way to explaining deficiencies in, amongst other things enterprise, BERD, productivity gap) Education improvement (and not just a graduate policy!) is the best evidenced route to improvement but a long run investment The base case outlook is one that should not be considered acceptable the biggest policy challenge in generations 45

However growth will not eradicate inequalities Inequalities at local level are evident and could widen! Some local authority areas in NI face considerable challenges in relation to employment creation - their skills profile and economic structure do not favour sectors likely to drive growth Future growth is expected to be in high value added activities, which tend to favour urban areas with large pools of skilled labour General economic growth will not address social problems at local level So Central and Local Government face difficult choices : Cuts of any kind (internal or external) will bring pain but how can that pain be minimised? At regional level is there anything that can be done (corporation tax, public sector reform, transfer of more power, tax rises, etc) to position the region on a faster growth path? Should we invest in skills and training, or infrastructure, or regeneration? It is a time for responsibility in NI we have not tackled inequalities with a significant pot of public money. Time to think carefully about priorities and direct local resource into local problems (and build on local success). The gravy train is leaving and unfortunately despite its long stay it leaves behind many problems 46

Contact Details: Oxford Economics Lagan House Sackville Street Lisburn County Down BT27 4AB UK Tel: 028 9266 0669 Fax: 028 9267 0895 ngibson@oxfordeconomics.com