Northern Ireland’s economic productivity worst of any UK region

Northern Ireland has the worst productivity performance of any region in the UK, lagging the region’s average by 17 per cent, according to new research from Queen’s University Belfast.

The findings are from the Northern Ireland Productivity Dashboard 2022, which examines Northern Ireland’s performance across 18 different drivers of productivity, relative to the UK average and other regions, and over time.

The report defines productivity as “the value of output produced in the economy for a given amount of work”.

“It is crucial for the local economy,” it notes. “Higher productivity means higher wages and better living standards. It can also mean more money available to invest in public services.”

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The most recent data shows productivity in Northern Ireland is 17 per cent below the UK average. Northern Ireland also lags behind the Republic, where productivity is about 29 per cent higher than the UK average.

Low skills

The report says “significant progress has been made” within skills, including a reduction in the brain drain, and a drop in the number of individuals with no or low skills.

There are some drivers where Northern Ireland performs better than most other UK regions, including export intensity, R&D per job, and gross fixed capital formation.

However, both exports and R&D have failed to see improvements over time, and the long-term decline in gross fixed capital formation is described as “concerning for future productivity growth”.

Business innovation, entrepreneurial activity, and employer-provided training are all areas “where improvement is needed if productivity is to be raised”. Despite being a focus of policymakers, Northern Ireland’s relatively low level of foreign direct investment is described as “disappointing”.

In 2020, 31 per cent of SMEs in Northern Ireland rated political uncertainty and government policy as a major obstacle in running their business as they would wish in the next 12 months.

For SMEs in Northern Ireland during 2020, 10 per cent rated access to external finance as a major obstacle to running their business over the next 12 months.

Northern Ireland has historically suffered from a brain drain. However, this situation has recently improved, with a rapid increase in the proportion of the working population possessing tertiary education, from 30.5 per cent in 2016, to 41.6 per cent in 2021.

UK average

In 2021, 19.7 per cent of the working population had no or low skills. This was higher than the UK average of 16.1 per cent and the worst of the UK’s 12 regions.

High rates of economic inactivity remain a persistent feature of the local economy. For those in the working age population (aged 16-64), 28.3 per cent were economically inactive in Northern Ireland for April-June 2022.

In May 2022, 24-34 per cent of premises could receive outdoor 5G coverage from at least one operator, compared to 48-64 per cent for the UK overall.

Queen’s University professor John Turner said the data show “the weak state of the Northern Ireland economy. It also reveals what Northern Ireland needs to work on if it is to have a prosperous future. None of this, however, will be possible without a stable government in Stormont.”