A Commentary on Economic Data in Northern Ireland

This report, on the data available on the Northern Ireland economy, was commissioned by the Centre for Economic Empowerment and was carried out by Michael Burke.

Executive Summary

Introduction

This paper considers the availability of economic data in Northern Ireland. It explores whether official data sources are sufficient to facilitate the development and monitoring of economic policy, and proposes ways in which existing datasets could be enhanced. It is not possible to provide a complete analysis of the benefits and limitations of the official and privately-generated economic data. Instead, the approach is to review some key data sources and to highlight areas for improvement.

The Need for Regional Economic Data

Economic activity is inherently complex and variable. Monitoring economic activity is a major challenge, especially in regional economies where resources are fewer and activity is more variable. However the need for robust economic data in Northern Ireland is pressing given its background of long-term economic decline. Devolution adds further impetus to the need for regionalised data.

Discussion of Economic Data in Northern Ireland

An examination of the data available for Northern Ireland reveals significant shortcomings and time-lags, enough to harm or impinge on evidence-based decision making.

The Executive’s Northern Ireland Economic Strategy seeks to increase the level of exports but the export data is not disaggregated by component or destination. There is therefore little information to suggest ways in which to diversify or further trade links. The Strategy also aims to bring about private sector growth but the absence of data relating to Gross Domestic Product and Gross Fixed Capital Formation, makes it difficult to ascertain the scope of activity of all key sectors of the economy, households, government and business. Another objective is to improve competitiveness, but the absence of a reliable measure of Gross Domestic Product limits the scope to compare the competitiveness of Northern Ireland against other economies.

There are significant omissions in public finance data. Much of the spending allocated to Northern Ireland is simply a convention of UK Treasury accounting rather than the actual level of spending. Concrete data of revenues generated in Northern Ireland are almost entirely absent.

The Northern Ireland Composite Economic Index is based solely on estimates of output (plus some data on employment), not on the trio of output, income and expenditure required for Gross Domestic Product data. Both foreign trade and net factor income from abroad are missing.

The Annual Business Survey could be usefully expanded to facilitate geographical analysis. Such information would be invaluable in attracting inward investment and stimulating growth.

Summary publications such as Regional Economic Indicators are limited by the absence of data on Gross Domestic Product, inflation, Gross Fixed Capital Formation, and expenditure. It would be useful if the information on business births and deaths was disaggregated by enterprise size and sector. The lack of Input-Output tables is a key omission.

In summary, the following areas are either absent or could be improved:

Some of the economic and labour market statistics for Northern Ireland can be found on the Department of Enterprise, Trade and Investment website

• Input-output tables.
• Retail sales.
• Gross Value Added output, income and expenditure.
• Inflation.
• Capital stock.
• Gross Fixed Capital Formation.
• Proportion of value-added in exports.
• Exports disaggregated by component or destination.
• Import data on the same basis.
• Compensation of Employees.
• Tax receipts and public expenditures.
• Composition of household consumption.

A Benchmark for Northern Ireland

The above omissions warrant a comprehensive review. Northern Ireland should seek to move towards a National Account framework. Scotland provides a useful comparator; the statistics gathered in respect of GDP, exports, Input-Output tables are more advanced in Scotland than in Northern Ireland.

Northern Ireland differs from Scotland in that it is geographically separated from Britain and shares a land border with the Republic of Ireland. In this context it is important to consider the scope for co-ordinating economic data gathering and dissemination in Northern Ireland and the Republic of Ireland.

Recommendations

1. The Executive should produce a detailed and coherent strategy for the development, collection and publication of accurate and appropriate economic data for Northern Ireland which supports both the development of, and the evaluation of the success or otherwise of local economic strategies. This strategy should also support systematic and holistic analysis of the local economy.
2. The Scottish Government has provided a template for the fullness of economic data that could be produced in Northern Ireland. The Executive should adopt a similar approach.
3. The Executive, with input from and the support of the relevant UK agencies, should develop a mechanism through which to illustrate Gross Fixed Capital Formation, Gross National Product and Gross Domestic Product at the Northern Ireland Level.
4. The Executive, together with the relevant UK agencies, should provide income-output data at a level that allows a detailed understanding of the import and export relationships that exist between Northern Ireland and other areas.
5. Consideration should be given to mechanisms to address the information gaps relating to public expenditure and revenue in Northern Ireland.
6. The sample size for the Annual Business Inquiry needs to be increased. In the case of Northern Ireland this could mean it becomes a census. At present it is not possible to explore the data geographically, meaning it is not possible to understand which sectors are successful in which areas. This information is extremely important in the context of understanding how to attract and grow investment.

This report is part of a series of research on the Northern Ireland economy. You can see the rest of our reports here.