Economies – North and South

The cost of living crisis has hit Northern Ireland very severely, with costs rising much faster than incomes. In fact, incomes last year increased more slowly in Northern Ireland than in any other part of the UK — reflecting our greater dependence on the public sector (where pay has been held down by British government policy) and benefits.

Meanwhile, some costs are higher here than elsewhere. Northern Ireland has the UK’s second highest average grocery costs — behind only the high-income South East of England — presumably as a result of higher logistics costs to ship items here. And housing costs are rising faster in Northern Ireland than in any other part of the UK — and in recent years at a rate twice that of the UK average. But, of course, housing is even more expensive in Ireland, especially in Dublin, while being even more costly again in London.

These are headline findings from a paper of mine recently published by ARINS (Analysing and Researching Ireland, North and South), which compared the costs and standards of living between Northern Ireland, Great Britain and the Republic of Ireland.

It is widely understood that both incomes and the cost of living are higher in the Republic than in Northern Ireland. Once both these factors are taken into account, average disposable income in the Republic is slightly higher than in Northern Ireland, while being higher again in Great Britain.

Averages, of course, hide many individual differences. Pensioner poverty is significantly lower in the Republic of Ireland (at 6.8%) than in the UK (at 15.5%), In part, this is the result of state pensions and welfare benefits being higher in the Republic than in the UK.

The Republic is generally a more equal country than the UK, with a more progressive tax system.

Income inequality sits at 13.1% in the Republic, against 18.6% in the UK. The figure for Northern Ireland is slightly lower, at 18%, as a result, in part, of mitigations here of some British welfare reforms, but also because of a lower pay culture and fewer people being on the very highest pay levels. In fact, Northern Ireland has the lowest employee pay average of any UK region.

A recent opinion poll found that expectations of the impact on personal finances will be a key factor in any referendum on Irish unity, should one take place at some point in the future. None of this information will answer the question of whether an individual would be better or worse off as a result of constitutional change. Any voters anyway may prioritise other factors — not just identity, but also, and crucially, perceptions around the quality of public services.

Health would be an important consideration in this, not least with the NHS in Northern Ireland in a state of severe crisis. The Republic’s health service is also facing serious challenges, but waiting lists are shorter and a series of reforms is under way that have led to more than half of the population being entitled to free GP consultations, while one in three has a medical card that provides comprehensive free healthcare. Average life expectancy is longer in the Republic than in Northern Ireland.

Education and skills would be another core policy consideration. Although there is significant support in Northern Ireland for academic selection, the evidence is that the Republic produces a significantly better qualified workforce and this is an important factor in its much higher levels of productivity, which in turn results in higher national income per person.

It is the similarities between Great Britain, the Republic and Northern Ireland that offer what is perhaps the most concerning policy challenge. All the jurisdictions are weighted heavily in favour of their capital cities — this is true of Dublin, London and Belfast. And this is contrary to the practice, policy and experience of much of mainland Europe.

The North West of the island of Ireland is much poorer than the rest of the island, in much the same way that the North East of England is the weakest region of Great Britain. There is a need for policy makers in Great Britain, Northern Ireland and Ireland to improve the regional distribution of wealth, income and influence.

None of this data predicts what will happen in the future. The Republic has a smaller economy that is dynamic, but more vulnerable to external shocks. On the other hand, the UK’s economic performance has been damaged first by austerity — which negatively impacted education and skills outcomes, in particular — and subsequently by Brexit.

Advocates of Brexit argue that it will produce medium and long term benefits through the UK itself becoming more dynamic and successful. I doubt if that is true, but time will tell.

‘Who is Better-off: the Irish, the Northern Irish or the British?’ is published on the Royal Irish Academy website,, along with a related podcast. 

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