Derry economy lags far behind Belfast with productivity 23% below UK level

A new report from Queen’s shows the Executive needs to do far more to tackle Derry’s poor economic performance.

Friday, 19th November 2021, 4:33 pm
Updated Friday, 19th November 2021, 4:34 pm
Sinéad McLaughlin MLA

‘NI’s Productivity Challenge’, a new green paper published yesterday, reveals Derry suffers a far worse ‘productivity gap’ compared with the UK than Belfast.

Authors David Jordan and John Turner note that ‘productivity’ - Gross Value Added (GVA) per hour worked or per job - is much too low in Derry. The ‘productivity gap’ between here and the UK is huge, the study demonstrates.

“Belfast has the smallest productivity gap, only 6 per cent below the UK level (when measured as output per filled job), while Derry City and Strabane has the largest gap, at 23 per cent below the UK level,” they state.

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Worryingly, the paper shows Derry is the worst performing area of the worst performing region of a UK which has ‘stagnated relative to its peers’.

It suggests a number of possible explanations for our poor economic fortunes including a high concentration of low productivity sectors, geographical peripherality, infrastructure and skills gaps and a ‘brain drain’.

But the authors welcome the fact that ‘improving productivity is a feature of recent public policy, including both the Belfast City Region Deal and ‘the Derry~Londonderry and Strabane City Region Deal’.

Foyle SDLP MLA Sinéad McLaughlin said: “This report is extremely concerning for Derry, but it is no surprise as it confirms the findings of other research.”

She said she agreed the City Deal is one way of attempting to address the stark productivity gap evident in the north west.

“The Derry and Strabane City Deal is intended to address some of the weaknesses identified by the Queen’s research.

“The City Deal is expected to develop high technology sectors that will provide well paid jobs and a new industrial base for our city and region,” she said.

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But she insisted the Executive and state agencies must be more focused on addressing the severe regional imbalances that have been once again highlighted by the report.

“It is essential that the Executive implements the commitments entered into as part of New Decade, New Approach for a regionally balanced economy. This requires Invest NI to be instructed to promote investment and economic development across the whole of the North of Ireland.

"This means that Invest NI must focus more of its efforts on promoting job creation in and around Derry, particularly in those sectors offering the greatest prospects for the future. Invest NI needs to learn from the success of the South’s IDA, which is required by the Irish government to consider the needs and potential for all regions.”

John Turner, Professor of Finance and Financial History at Queen’s Management School, and NI Productivity Forum Lead, said: “NI is the poorest performing UK region for productivity, almost 20 per cent below the UK level. Increasing productivity is key to improving NI’s prosperity, with low productivity identified as central to explaining the region’s persistently poor economic performance.”

Dr David Jordan, Research Fellow in Economics at Queen’s Management School and researcher on the NI Productivity Forum, said: “A greater understanding is needed by both policymakers and business of what the drivers of this underperformance are, why this is the case, and the role of policy and political institutions in shaping this.

“Identifying how to improve skills, alongside ways to attract firms and industries which can take advantage of a more highly skilled workforce, are key issues which must be addressed if Northern Ireland’s economic performance is to be improved.”

The research was conducted in partnership with the Productivity Institute (TPI), based at the University of Manchester, and funded by the Economic and Social Research Council (ESRC).