Economic crisis – a tale of two Irelands?

Few will doubt we are entering a storm. Prof Nouriel Roubini of New York talks of interconnecting “megathreats” that may combine to make life difficult. From cold war to real war, debt and climate crisis – even a potential collapse of the eurozone fueled by Italian debt. He’s labeled Dr Doom by the Alt-right but he has a good track record at forecasting. My question is this. Will both jurisdictions on this island come through the crisis in the same way? Will the relative wealth of the people in the 6 and 26 counties rise or fall in unison?

The start point favours the Republic. Going into this crisis, the UK has a £50bn black hole in the public finances. Hunt’s budget on 17th November will be a return to austerity. The Republic though, is awash with money. The corporation tax take for 2022 so far is €16.5bn vice a budgeted €10.5bn (source Irish Times). That’s €6bn government cash in hand they didn’t expect. Unemployment is 4.4% in RoI and heading for 6.5% in UK. Interest rates are 1.5% in RoI and 3% in the UK. What does this mean for ordinary people?

As the UK cuts public expenditure, the Irish are throwing government money about. Education spend is 5% over budget. Private hospitals are being contracted to tackle waiting lists. Ironically public patients in Donegal can get treatment in a private hospital near Limavady, yet in May, I canvassed a lady in Omagh waiting for a hip replacement who’d had such an offer revoked by the NHS on the grounds of no money.

Of course comparisons are tricky. The cost of living remains higher in RoI. The interest rate advantage compared to UK/NI won’t mean cheaper mortgages as Irish banks are required to keep high levels of capital reserves – which is why Ulster Bank and KBC are leaving the Irish market. My contention is simply this. Inequality is going to get worse in the North. The jury is out in the South except that benefit levels are already higher and despite more Ukrainian refugees and a lack of affordable housing, the safety net is such that absolute poverty will remain rare.

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