In case you hadn’t noticed its Titanic season. The article attached was published 3 years ago and explains how the Northern Ireland economy (RMS Economic) hit its own financial / economic icebergs and the damaged caused. Since then, more European vessels have run into bother most notably Hellenic & Hispanic!
A second article, which identifies the current challenges facing RMS Economic, will be published and circulated early next week.
On the 14 April 1912, Titanic, which was the pride of Belfast, hit an iceberg and sunk on its maiden voyage. The ship had some of the most advanced technology of the time. However, it was not technology that let the ship down but a combination of factors which included: – freak environmental conditions, communication problems and a simple failing that was taken for granted – the rivets proved to be defective. Prior to the Titanic’s ill-fated voyage, Captain Edward Smith said that he could not think of an accident that would sink the ship.
Similarly, economists and government alike could not think of a set of circumstances which would tip the Northern Ireland economy into recession. After all, with a huge public sector, the belief prevailed that the economy was recession-proof. This was founded on NI’s ability to withstand the last British recession. Should the economy encounter stormy economic conditions again, the assumption was that history would simply repeat itself. However, the combination of a freak housing boom and bust alongside unprecedented external economic conditions has now confined this view to the history books.
The SS Celtic Tiger
In recent decades, SS Celtic Tiger was the proud holder of the Blue Riband award for the fastest economic growth. Its economic design and low corporation tax were admired and copied by shipyards the world over in a bid to emulate its success.
On 14 April 1912, the US steamer Amerika warned of icebergs on Titanic’s shipping route. The fact that these had drifted so far south was reckoned to be a once in a hundred year event. In 2007, the US warned other economies that large financial and economic icebergs lay ahead. The fall in US house prices started to reveal the tip of a huge financial iceberg the credit crunch. All economies, including NI, have since sailed straight into it.
Following the initial impact, it was believed that the damage on RMS Economic was relatively minor. However, the compartment containing the property sector had been overheating for quite some time and the pressure from this, alongside the collision, ripped a hole in RMS Economic below the waterline. This was apparent to all workers in the house-building / property compartment but it was not visible to those on the bridge. Flooding in the housing sector quickly spread into construction and over the bulk heads into private sector services. Casualties, in terms of the numbers of unemployed rose rapidly.
In the longer-term, when RMS Economic is eventually returned to port, its owners must quickly modernise the vessel. The waters will then be less turbulent and a faster, more advanced, RMS Economic must emerge to ensure we aren’t left in the wake of the competition.
Post by Richard Ramsey, Chief Economist, Northern Ireland, Ulster Bank Group Communications