Rioters wreak havoc on North's economy

BELFAST BRIEFING:IT IS depressingly familiar, but Northern Ireland is yet again counting the economic cost of the violence and unrest that followed the annual July 12th commemorations last week.

Belfast this year set out to encourage visitors and locals alike to view the “Orangefest” event in the city as “a family-friendly pageant”.

It is hard to imagine, then, what any visitor to the North must have made of the unrest and riots that took place after the parades, particularly in north Belfast. It is also difficult to see how the events that unfolded would not influence whether they decided to return to the North in the near future.

The impact of images featuring balaclava-clad youths hurling missiles and bombs at security forces being seen by a global audience of potential visitors and, worse still, investors is economically devastating.

The North is desperately trying to persuade companies, particularly US organisations, to relocate here.

The Northern Ireland Bureau in Washington is even encouraging potential US investors to “take a closer look” at the North by clicking on the “building on a new partnership” video on its website (www.nibureau.com).

The video provides viewers with an upbeat, buoyant picture of what Northern Ireland has to offer, depicting it as a bustling, busy and brightly optimistic location.

Hollywood stars Tom Hanks and Bill Murray even pop up in the video to relate their experiences of the North while making the film City Of Emberat the Paint Hall studio in Belfast.

But while the camera certainly does not lie in this instance, the unfortunate reality of life in Northern Ireland means the local economy is far from a rising star.

Latest labour-market figures show unemployment is rising steadily and could, in a worst-case scenario, be heading for a high of 65,000 people out of work by next year.

The unemployment rate in Northern Ireland rose from March to May to an estimated 6.3 per cent.

During the same period, the North’s workforce shrank dramatically.

Latest figures show that, over the past year, the total number of people in employment in the North has fallen by 51,000 to 744,000.

This is the largest annual decrease in 17 years.

According to Richard Ramsey, Ulster Bank’s Northern Ireland economist, the rapid rise in the number of economically inactive people in the North is a major cause for concern.

He says there is strong evidence that an “increasing number of individuals are opting out of looking for work altogether for one reason or another”.

“The rise in economic inactivity is due to a sharp rise in student numbers, a significant rise in the number of sick and disabled, and a modest rise the number of individuals moving back into family/household duties,” he says.

According to Ramsey, there has been an increase in the number of people opting for retirement, while the figures also reflect a percentage of people who do not necessarily need to work.

The North has a higher percentage than anywhere else in the UK of economically inactive people who do not want to work because they are registered as sick or disabled, he says.

While the number of individuals classified as long-term sick has fallen in general terms in the UK, the reverse is the case in Northern Ireland, where it is continuing to rise, according to Ramsey.

Ramsey is far from being the only economic commentator who is concerned by this scenario.

Alan Bridle, head of economics and research with Bank of Ireland’s UK business banking division, believes the official jobless figures in the North portray a “misleading picture of the true state of the local labour market”.

Bridle says Northern Ireland is suffering from “hidden unemployment”, which political leaders in the North need to address urgently.

“Unemployment rates are highly unlikely to return to the mid-teen percentage peaks of the 1980s and should remain below Britain in the short term,” he says.

“But the risks of a jobless recovery in Northern Ireland are real, with the 18 to 30 age cohort a growing concern [and] with the associated risks of a return to significant emigration.”

If ever the North needed to attract new investors to help dig it out of its current economic hole by creating plentiful well-paid jobs, now is the time.

The brief return to riots and unrest last week may yet prove to be more costly for the North than the already significant bill it will present in terms of security and clean-ups.

But it is unlikely to bother many of those who were involved in holding the North’s economic fortunes to ransom as they rioted into the small hours.

Chances are they were not getting up for work the next morning.