Hundreds of Derry’s residents walked, ran and cycled along the city’s beautiful riverside every day over the Christmas and new year period – sometimes in bitterly cold winter weather. This is an astonishing transformation from the time when I moved to Derry 26 years ago, when I was stunned to find almost no one took advantage of the Foyle waterscape. In part, that could be explained by car parks blocking the riverside stretch.
As the writer of a series of studies on city regeneration in the English Midlands, I feel qualified to say that Derry is home to one of the most outstanding regeneration makeovers I’ve ever seen. As well as the riverside greenways, we have the Ebrington transformation that is ever so slowly moving towards completion, the Guildhall renovation, rail station restoration and the Peace Bridge. (Much of the funding, it should be noted, has come from the European Union and the Irish and British governments.)
Even the city’s main shopping centre, the Foyleside, has received a significant upgrade. Ulster University’s Magee campus has more students than ever before and there are plans – as yet without guaranteed funding or sufficient residential accommodation – to reach 10,000 students by 2032.
City of Culture designation in 2013 was itself transformative in boosting investment and changing both external and internal perceptions of the city. Derry became internationally known for the right reasons.
But looking and sounding great is a very different thing from being financially strong – especially outside the tourism season. In recent days the city has been hit by a series of closures in the hospitality sector – Pyke ‘N’ Pommes restaurant, a Costa branch, The Lounge and Synge & Byrne have all gone or are going, with other cafes expected to follow.
Derry is a low income city, which makes it very difficult for food and drink outlets to survive away from the tourism season. According to the most recent analysis, in 2022, Derry and Strabane had the lowest disposable household income of any Northern Ireland council area. In the most recent statistics on income, Derry had the second lowest seasonal incomes and third lowest non seasonal mean incomes.
Yet the Ulster University Economic Policy Centre has reached conclusions that might be regarded as much more positive. Derry City and Strabane has had the second highest economic growth rate, behind that of Belfast. Taken on its own, that is a misleading conclusion as the gap between Belfast and the rest of Northern Ireland is accelerating. In 1998, Belfast’s gross value added per capita was 42% above the average: by 2023 it had become 80% greater. Derry and Strabane was 23% below the average in 1998 and now lags by an improved 16%.
It is reasonable to conclude that Northern Ireland has more than a Derry and Strabane problem – it has a problem that hits much of the large land mass that sits outside the Belfast Metropolitan Area. Sinéad McLaughlin MLA – my former boss – managed to force out of Invest NI figures that revealed that of 529 jobs attracted from first time external investors by Invest NI in the 2024/25 year, some 526 were located in Belfast and area, two went to Mid and East Antrim and a mere one to Derry (that investor has since moved to Omagh). McLaughlin made the point in connection with her Bill promoting regional balance in investment and social and economic health.
The current difficulties in Derry and Strabane are about very much more than a shortage of inward investment. Some of the new businesses are driving out the old: Ebrington at present seems to be displacing jobs in the city centre, rather than adding to total economic activity and employment. New hotels are attracting higher visitor numbers, but as they contain additional bars and places to eat, they also increase competition for older hospitality businesses.
Struggling and closing businesses are unsurprisingly blaming increased National Insurance costs for problems. They also point to Northern Ireland’s business rates, which some employer bodies have claimed are the highest in the UK – with Derry and Strabane being the second most expensive in NI. A briefing paper from the Northern Ireland Assembly Research and Information Service last year concluded that the complexity of different relief schemes in the four nations makes comparisons over-simplistic, very difficult and inconclusive. Sadly, the rating system tends to place the highest bills on the poorest areas.
As I have observed before in this column, it is difficult to see how the Derry and Strabane council region can fundamentally and structurally improve its economic performance unless it is more closely aligned with its natural hinterland across the border. The economic performance indicators in terms of unemployment/employment rate and pay rates are very similar in Derry/Strabane and in Donegal. (It is a point I will explain further at a conference in Derry’s Holywell Trust on 25th February.) Legal and organisational differences create barriers in making a natural cross border north west region work more effectively in an integrated way.
Ultimately, it is to the benefit of Northern Ireland as a whole if everywhere can be lifted up to match Belfast’s performance. Improved financial conditions away from the capital would not in itself solve the Executive’s financial crisis, but they would make a useful contribution. For Belfast to outperform the rest of NI by 80% may seem wonderful for parts of the city and its commuter suburbs, but it represents an unacceptable economic and social division.