Issues

The future of the regional economy

 

A diverse panel of experts from across the North West gathered at the Northern Ireland Economic Conference 2016 in Derry to discuss the current and future challenges for the region.

Addressing the current state of the economy in the North West, Derry-based economic commentator Paul Gosling believes that “the legacy of past sectarianism” from the pre-1960s has shaped the region’s “weak” economy. He argues that the decisions taken in the past have impacted on the region not having the transport infrastructure, connectivity and academic institutions that it now requires. He also points to a financial deficit caused by the conflict, stating that the Troubles heavily disrupted a history of tourism income which the region may otherwise have enjoyed and put to good use. “Broadly a lot of work is being done and improvements in the economy are evident. However, in order to reach our potential productivity and have a more competitive economy we need to nurture skills in an environment where these economic weaknesses have been addressed.”

Gavin Killeen, President of Londonderry Chamber of Commerce and Managing Director of Nuprint Technologies Limited, believes that there are already positive signs that the regional economy is improving, especially in tourism. “The City of Culture helped showcase the area and since then more tourists are visiting every day. We’re seeing an increase in the number of occupied bedrooms and our night time economy is flourishing thanks to investment,” he says. Agreeing that increased connectivity will play a major part in economic growth, Killeen points to the North West’s digital economy as an example. He adds: “Our digital economy is doing very well but it could be doing better. In recent years we have a number of high profile companies setting up and thriving here, companies like Allstate for example. However, while the signs are positive that these companies are here, there is a broad consensus that we need to have more of them.”

 

CBI Northern Ireland Chair, David Gavaghan.
CBI Northern Ireland Chair, David Gavaghan.

Fergal O’Brien, Director of Policy and Chief Economist, Ibec, contends that while peripherality has always been a challenge for the North West’s regional economy, the format of the digital economy means that it is becoming less of an obstacle for businesses. “In terms of the types of businesses and industries we can grow in the future there will be less of peripherality as a barrier because the distance of market is widening and with it the possibilities.” He believes that a focus must now lie in delivering a better quality of life for citizens. “For corporations the dynamic between economic location factors and talent is now changing and we are in an era of talent. I believe that creating a space for talent to live and work, above and beyond any other region in the country, is at the centre of the North West’s opportunity gap. Capturing, promoting and investing in that will mean that peripherality is no longer a limiting factor.”

Aidan Gough, Strategy and Policy Director of InterTradeIreland believes that we are in danger of being too negative about the regional economy, which is currently exhibiting some of its massive potential. Pointing to the academic institutions and the diversity in the economic sectors, he says there is now a much closer and strategic cooperation in promoting the region, moving away from a history of project-led promotion.

Connectivity

Fergal O’Brien argues that thinking on an all-island basis is crucial to future ambitions for the region. “We have an Atlantic Way, let’s get an Atlantic motorway as well,” he quips. “The core onus on the conversation of moving forward is ambition and I think the main challenge to it lies in the perception of demographic decline. If policy makers in Belfast and Dublin perceive this as a region in decline we are not going to see ambition in investment. With an all-island outlook we are looking at a market of potentially 10 million people – the ambition will be bigger, it will be better and will look at planning for the infrastructure needs of 2050 and beyond, not just delivering on the infrastructure gap for today.”

Both Edward Montgomery of The Honourable The Irish Society and Gavin Killeen, believe that the City of Derry Airport has a key role to play in connecting the North West’s economy. While Montgomery states that maintaining a flight to London is important, Killeen goes further, believing that the further promotion of the airport could be a “game-changer” for the region. He concludes: “Sub-regional airports throughout Europe do not make money but they are there to provide a service of connectivity beneficial on a bigger scale.” Welcoming the Executive’s £7 million support package announced in 2016, he added that a constant connection to London could also pave the way for extension into other areas of benefit such as Manchester and Birmingham.

Brexit

Of the issue of Brexit, many in the panel voiced their concerns about the potential impact to the regional, and wider economy’s agri-food sector. CBI Northern Ireland, Chair, David Gavaghan, called for a stronger focus on the connectivity of rural areas within the region, believing there is a need for greater innovation. Utilising Skibbereen in County Cork as an example, he outlines the fact that the town recently hosted a digital global conference, which attracted more delegates than its population and was heralded as a great success. “I suppose the challenge for us all is about innovation to see the global opportunities,” he adds.

 

(L to R): Edward Montgomery, Fergal O’Brien and Aidan Gough.

 

Fergal O’Brien believes another opportunity for the North West in the face of Brexit may lie in financial services. Taking inspiration in conversations being had between Dublin and London, in a collaborative rather than a competitive environment, around access to the Single Market for financial services, he says; “It might be worthwhile having the conversation in the North West on a cross border and east-west dimension.” Recognising capacity issues in Dublin, he adds: “The North West could offer a unique cross-border opportunity that offers all sorts of flexibility, covering a range of contingencies of what the overall outcome might be for financial services.”

Future

Speaking about the sectors the North West should focus on moving forward, David Gavaghan, points to tourism as a ready-made economic driver. “A strategy for improving tourism is something that can be generated quickly and something that generates a lot of money when done well. However, I don’t think it’s a question of picking one sector, it’s about focusing on a lot of sectors at the same time but recognising that it is important to get young people, who haven’t got jobs, working.”

Paul Gosling argues that while tourism is an important sector for the region, it largely generates low wages. He points to a digital economy and taking advantage of Derry’s world-class digital infrastructure as a way forward.

Gavin Killeen agrees that the North West can continue to grow its digital economy and engineering sector, stating that the region is already home to leading businesses in these areas. On tourism, he adds: “We live in a beautiful part of the world that people should want to come to if we get our offering right. The tourism sector offers an opportunity to people who don’t have the skills or qualifications to get a start and progress up the career ladder.”

Aidan Gough believes that as well as being an obvious economic driver, the tourism sector can also offer a platform for entrepreneurial growth and promotion. Looking longer-term, he says that a focus on the life, science, health sector, with things like pharmaceuticals and medical devices will offer greater opportunities for the growth and expansion of the research, global and indigenous businesses within the region.

In addition to a tourism and heritage offering, which Edward Montgomery agrees offers a quick win for the region, he stresses the importance of local businesses seizing opportunities to enter new markets. He says that while city to city links are vitally important, businesses must also utilise things such as the opportunity to travel with the Lord Mayor on business delegations.

Concluding, Fergal O’Brien agrees that a smart specialisation approach in the North West would be beneficial. He adds: “I really like the idea of an entrepreneurial spirit and what that can bring in terms of micro-businesses. Tourism is a driver in making these changes happen. Going back to the quality of life discussion, we’re not building up our heritage and culture just to attract American visitors, we’re doing it because we want the North West to be a great place to live, work and visit.”


Panel participants:
David Gavaghan, Chair
CBI Northern Ireland
Paul Gosling, Financial journalist/ commentator
Aidan Gough, Strategy & Policy Director, InterTradeIreland
Gavin Killeen, President, Londonderry Chamber of Commerce & Managing Director, Nuprint Technologies Limited
Fergal O’Brien, Director of Policy and Chief Economist, Ibec
Edward Montgomery, Representative, The Honourable The Irish Society

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