The divergent fortunes of the Irish and Northern Irish economies over the last decade or more has been laid out in great detail by the Economic and Social Research Institute (ESRI) in a report published this week under the umbrella of the Department of the Taoiseach’s Shared Ireland initiative.
The report finds a significant and widening gap in living standards between the North and South. Disposable household income in the Republic – the ESRI’s preferred measure of living standards – is now some 18 percent higher than in Northern Ireland. There are also other gaps in areas ranging from infant mortality to life expectancy, many reflecting a reverse in long-standing trends.
The ESRI does not single out any one cause of the divergence and notes the structural difference between the two economies. The Republic is a national economy within the European Union while Northern Ireland is a region within the United Kingdom economy and has lacked effective devolved government.
But it is clear there are now two very different economies on this island. One, the Republic, has enjoyed strong economic and population growth after the financial crisis. Large numbers now work in high- wage, high-productivity jobs in technology and finance, with corporation tax accounting for 21 per cent of tax revenues. Northern Ireland has lower levels of employment and educational attainment and a higher proportion of workers are employed by the state.
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Despite paying higher taxes, workers in the Republic have higher-disposal incomes because they earn more. This raises issues in terms of the the goals of the Shared Ireland initiative, which include development on both sides of the Border and the building of “consensus around a shared future on the island”.
The scale of this challenge is only going to be made bigger by continued economic divergence. And the gap will only start to close when Northern Ireland sees better investment in key areas, notably education at all levels and also economic and social infrastructure.
