Economic Strategy: a progress report

Northern Ireland moved from recession to recovery over the course of 2013-2014. The Executive’s Economic Strategy has achieved high levels of inward investment but export performance has been lower than anticipated. agendaNi assesses the progress made to date.

Published in March 2012, the Economic Strategy sets out how the Executive will support economic development and job creation; it is due to be formally reviewed later this year. In the meantime, the Executive’s annual monitoring reports have described the region’s shift from recession to recovery.

“After a prolonged period of economic uncertainty, a more positive outlook for the local economy is now emerging,” Enterprise Minister Arlene Foster stated.

Economic activity in 2013-2014 increased for the first time in seven years and independent forecasters expected that the economy would grow by

2.2-2.8 per cent in 2014. Final figures for the year are not year available. The Executive has prioritised export-led growth but despite some success stories and achievements, the export base remains small. The Department of Enterprise, Trade and Investment, Invest NI and InterTradeIreland are working to produce an exports action plan to improve this performance.

Over the course of 2013-2014, the Northern Ireland Composite Economic Index registered a 1.5 per cent growth in the private sector, with production growing by 4.3 per cent and services by 1.8 per cent. The general downward trend in construction continued.

Employment

A total of 7,500 people had moved off jobseeker’s allowance in the same timeframe. However, regional unemployment in March 2014 (7.4 per cent) was higher than that across the UK (6.8 per cent). Likewise, economic inactivity (26.8 per cent) was significantly above the national level (21.9 per cent). Plans to launch strategies on childcare – to help more women into work – and tackling economic inactivity have fallen behind schedule.

Of the 14,470 jobs added in 2013-2013, the majority (11,120) came from the services sector.

In a major success, Invest NI had secured commitments to create 9,098 jobs between 2011-2012 and 2013-2014, compared to its target of 6,300 jobs. The new jobs included 5,471 from inward investors. Around three-quarters of announced jobs (officially described as promoted) translate into new positions for employees. Separately, the Steps to Work programme had helped 1,269 people to find work in the three years up to 2014.

Sector focus

The Executive had set a target of increasing the overall value of manufacturing exports by 20 per cent between 2010-2011 and 2014-2015: from £5.6 billion to £6.8 billion. The target was based on optimistic growth forecasts for the euro zone and North America but demand was weaker than expected. As of March 2014, a 6.1 per cent increase from the baseline had been recorded with exports reaching a value of £6 billion.

More progress was made in increasing the value of exports to emerging economies, primarily the BRIC markets. A 43 per cent increase took place between 2010-2011 and 2013-2014 (inclusive), compared to a 40 per cent interim target. The objective is 60 per cent growth by March 2015.

Tourism numbers – including domestic visitors – had reached the 4.1 million target set down in the Programme for Government, with £723 million spent in 2013. The private sector-led Going for Growth strategy for the agri-food sector was published in May 2013 and the Executive response was agreed in June 2014.

R&D and skills

Research and development spending increased by 10 per cent in 2012 with faster growth (19 per cent) in the private sector. Business-related R&D totalled £461.3 million and accounted for 1.6 per cent of Northern Ireland’s gross value added: fifth place out of the twelve UK regions.

Within the workforce, 76.2 per cent of employees were qualified to NQF Level 2 (GCSE level) while 36.4 per cent had attained NQF Level 4 or above (higher education). Northern Ireland has made rapid progress in closing the literacy gap with other OECD nations and regions over the last twenty years but more work is needed to catch up with the best performers i.e. Japan and Finland.

In 2011-2012 and 2012-2013, Queen’s University and the University of Ulster secured £1.7 million in income from intellectual property and established 15 spin-out companies. The Department for Employment and Learning was confident that it would create an extra 1,210 undergraduate places and 300 PhDs in STEM-related subjects by this March, through funding to universities.

New strategies on apprenticeships (June 2014) and innovation (September 2014) have been published and ongoing reviews of the youth training system and careers strategy are examining the range of options available for young people.

Economic Pact

The UK Government and Northern Ireland Executive jointly agreed an Economic Pact in June 2013. Its two most significant results to date have been the review of business red tape and the Government’s legislation to devolve corporation tax. Northern Ireland will continue to retain its 100 per cent assisted area status for state aid to business for the medium term i.e. at least until 2016.

Executive policies to underpin infrastructure include the Urban Regeneration and Community Development Framework, the Regional Transportation Strategy, and the delivery of £53.8 million in capital funding for further and higher education over the last two years.

The monitoring report concluded that “considerable progress” has been made in the delivery of the Northern Ireland Economic Strategy but “recent momentum must be maintained and accelerated” as ministers looked towards 2014-2015 and beyond.

Forthcoming financial pressures meant that the Executive and Assembly needs to maintain its focus on supporting economic growth and employment: “We recognise that we cannot rest on our laurels and need to begin developing those projects and new initiatives which will be delivered beyond the current Programme for Government period.”

The strategy’s economic vision, to be achieved by 2030, is “an economy characterised by a sustainable and growing private sector, where a greater number of firms compete in global markets and there is growing employment and prosperity for all.”