Hillary Clinton to host Washington NI conference
US Secretary of State Hillary Clinton is to host a Northern Ireland economic conference in Washington on 19 October. Northern Ireland’s First Minister Peter Robinson, Deputy First Minister Martin McGuinness and enterprise minister Arlene Foster will all attend, along with senior officials from Invest NI.
Representatives of US companies already investing here will attend, as will some who have not done so. A spokesman for Invest NI said: “It is aimed at a small number of very senior executives in American companies that have not yet made investments in Northern Ireland.”
US Economic Envoy to Northern Ireland, Declan Kelly explained: “The Economic Conference provides a unique forum to showcase all that Northern Ireland offers to a selective, highly targeted group of companies. The potential investors at the conference will have the opportunity to hear the business case for investing in Northern Ireland from the best possible advocates, namely those companies that have already invested in the region.”
The State Department had promised to host the conference if policing and justice was devolved to a local minister in Northern Ireland and was part of the strategy to cement political process.
Over a thousand jobs have been created in Northern Ireland in the last year through US companies investing here. Investors include NYSE Technologies, which hopes to eventually employ 400 people in Belfast. Other US companies that have made major investments here in recent months include Q1 Labs, GE Energy and Coca Cola.
£2bn public spending cuts to hit construction sector
Devolved public spending in Northern Ireland will be cut by about a quarter next year, taking around £2bn out of the economy, First Minister Peter Robinson has warned.
“The prospect of our public expenditure being cut by 20 to 25% – in the region of £2bn – will have a devastating impact and likely bog Northern Ireland down in recession for a prolonged period,” said Mr Robinson. “The scenario coming from Treasury identifies capital expenditure as being the main target for reductions. With an already depressed construction industry the prospect of public sector construction drying up would ring alarm bells throughout the sector.”
The First Minister called on his ministerial colleagues to take rational and strategic decisions when managing reduced budgets, rather than playing to next year’s Assembly elections. “Given the scale of the Coalition’s cuts, very difficult and unpopular decisions are inevitable but I believe that the Executive is capable of responding to the challenge,” he said.
Long term trends in economic activity show that about 78% of Northern Ireland GDP is dependent on the public sector, compared to less than 50% in England. The economic impact of cuts to public spending will therefore be much greater here than in the rest of the UK. Wilfred Mitchell, policy chair of the Federation of Small Businesses, said: “The effects of public sector cuts here will be felt across almost every sector and will undoubtedly put further pressure on the private sector as it attempts to revitalise itself during this prolonged period of economic downturn.”
Subsidies at risk as wheat prices rise
Farmers could reap dividends from rising commodity prices – leading to agriculture in Northern Ireland and Great Britain losing its public subsidy. The prediction was made by UK environment and food secretary, Caroline Spelman.
UK farmers are well positioned to increase crop production, while their counterparts in other parts of the world suffer from unpredictable weather patterns as a result of global warming, said Ms Spelman. “Countries that have water are going to be better placed than those who don’t in a climate change world,” Ms Spelman told the Financial Times. “I think we will see globally a rise in commodity prices as a result of that.” But this could lead to a time “when agriculture probably won’t require a subsidy”, she added.
Food prices have risen substantially this year in reaction to severe weather incidents. Wheat prices rose as a result of very poor production in Russia, because of extreme heat and drought during the summer – leading to a ban on Russian wheat exports, which might last another year. Riots protesting against a 30% rise in bread prices have broken out in Mozambique. The price of wheat futures on the Chicago commodity exchange jumped to a two year high, rising more than 50% in two months.
Meat and dairy prices have risen on the back of more expensive grains. Sugar prices have also jumped following severe rain in producing countries Brazil and Pakistan. Oilseed prices have been volatile in recent months, with weak crops in Germany and France and higher demand for oilseed as an energy source. Cotton has also become more expensive, with severe weather damaging production in China and Pakistan – potentially leading to high street clothing price rises.
Barings, whose asset management arm invests heavily in agricultural stocks, predicts that service and supply companies in the agricultural sector are more likely to benefit from the improved trading environment than are farmers.
Gold price rises reflect weak economy
Fears that the global economy will be slow to emerge from recession – and that the United States and much of Europe will suffer a double dip – have led to record gold prices. Gold rose by over 16% during 2010, to reach an all time dollar high.
Continuing weak economic indicators in the United States have led more investors moving into gold from the dollar. And, because gold is priced in dollars, this creates an incentive for non-dollar investors to use gold as a safe haven – raising demand and therefore increasing prices further.
The weakness of the dollar is also leading to greater pressure on China to reduce the linkage of its currency, the renminbi, to the dollar. If China decouples the currencies this could raise the price of Chinese goods, leading to higher rates of inflation in Europe as well as America, further undermining economic recovery.
According to the World Gold Council, gold prices are also buoyant because of unprecedented demand from India and China for jewellery. With the two emerging industrial giants generating higher export incomes, more of their new rich are seeking to buy gold. Other precious metals are also in demand: silver and platinum prices are currently very high.
House prices keep falling
Northern Ireland house prices have now been falling consistently for three years – and are still falling, according to chartered surveyors here. The most recent survey of Royal Institution of Chartered Surveyors’ members found 55% reporting no change in house prices; 45% reporting price falls; and no one reporting increased prices.
According to RICS, it was the size of the inflated bubble in the past that has meant the collapse in recent times. RICS spokesman in Northern Ireland, Tom McClelland: explained: “House prices rose significantly between 1995 and 2004, and, at that stage, economic fundamentals suggest price growth should have moderated. But, instead, for a number of reasons, the opposite happened. This created a large price bubble between 2004 and 2007 that has been correcting.
“There is certainly much more stability in the market now than there was when the house price correction was at its most intense. There is also clearly significant variation in the marketplace currently, in terms of different areas and property types. There is also evidence of a return of investors, despite the squeeze on housing benefit impacting on the private rented sector. However, unsurprisingly, the process of correction continues in areas where price growth was most out of kilter with fundamentals. The challenge for the housing market now is the scale of public spending cuts coming our way, which will hit the local economy hard…. The recovery will be a long-term one.”
The most recent University of Ulster house price survey reported that some types of property were now selling for half the price at the peak of the market, with properties on the North coast falling in value by 20% in the last year and those in the North West by 25%.
Renewable heat ‘an exciting opportunity’
Renewable sources could provide 10% of Northern Ireland’s heating energy by 2020, according to a study carried out for the Department of Enterprise Trade and Investment. The study considered whether Northern Ireland should copy Great Britain by creating a Renewable Heat Incentive. It will be adopted in GB from April next year to reward businesses and other organizations installing renewable heat systems, such as those using heat-from-energy, other biomass, geothermal, solar thermal, anaerobic digestion and combined heat and power systems.
Enterprise minister Arlene Foster said: “I recognise the contribution that an increased renewable heat market in Northern Ireland could have, not only on wider energy policy goals such as fuel security and reduced carbon emissions, but also the tremendous opportunities this sector presents for green jobs.”
She added: “The Northern Ireland heat market is very different to the market in GB and therefore a specific renewable heat incentive scheme needs to be developed here to take into account our unique circumstances. I believe an RHI model that would support renewable heat installations….. could work for Northern Ireland as it has the potential to provide long-term stable support and confidence for the market to invest.”
All Northern Ireland businesses, other than sole traders, must now be registered with the Carbon Reduction Commitment Energy Efficiency Scheme if they use half hourly meters. This requires them to monitor emissions and purchase allowances equivalent to the amount of CO2 they emit.
Harland & Wolff win major offshore contract
Belfast’s iconic manufacturers Harland and Wolff have won a multimillion pound contract for the construction of two offshore substation platforms that will be the base for wind farms off the North Wales coast. The contract, awarded by Siemens for use by operator RWE Innogy, reinforces H&W’s position at the heart of the renewable energy industry.
Robert J Cooper, chief executive officer at H&W said: “We are already a recognised renewables logistics base and prototype builder and are delighted to have been awarded this contract. It clearly demonstrates our continuing development as part of the UK supply chain for marine renewable energy.”
Mr Cooper added that the company is hopeful of winning more contracts of a similar type. “A considerable number of these platforms are required to meet the Government’s 2020 targets, giving substantial opportunities in the near future,” he explained.
The contract was welcomed by enterprise minister Arlene Foster. “This is a significant contract win for Harland and Wolff as it continues to build its presence as a key player in global renewable energy markets,” she said. “Northern Ireland’s strong knowledge base, skilled engineering capability and favourable geographical location will result in significant opportunities for local firms throughout the manufacturing supply chain to win business in an emerging offshore wind sector valued at over £100bn. Given this potential, Invest Northern Ireland is working to ensure that Northern Ireland companies compete at the forefront of the renewable sector.”
Accountants tell ministers to cut costs
Northern Ireland’s public sector managers and politicians have been told to demonstrate strong leadership in making cuts to local public spending and to use new technologies to reduce overheads. The call was made by the public sector’s own representative body for financial managers and accountants, the Chartered Institute of Public Finance and Accountancy.
Public sector decision-makers were urged to cut out non-essential and low priority services; to reduce spending on red tape and administration; to take a knife to Northern Ireland’s ‘over-governance’ caused by political expediency; avoid the duplication of public service provision created by social and political division; and decentralise the oversight and decision-making on public spending to local levels.
In addition, said CIPFA, successfully making efficiency savings depends on how well senior executives in Northern Ireland’s government departments and non-departmental boards carry out their functions. CIPFA argued that public boards need to become more professional, strengthening their challenge and oversight capacity.
Keir Buckhurst, Government Alliance Service Director at consultants Accenture, and a speaker at CIPFA’s annual Northern Ireland conference in Newcastle County Down, said: “Challenging economic times require decisive leadership and clear strategic direction from those in leadership positions. At Accenture we are working with our public sector clients across the world to help them harness technology to reduce costs and improve citizen services. There are always new and innovative ways of delivering public services even when faced with the most challenging finance pressures – this is what we are working with our public service clients to help them achieve.”