I.L.E. NEWS

British-Irish Parliamentary Assembly Co-Chair Congratulates Derry

Fri, 16 Jul 2010 00:00:00 +0100

The Co-Chairman of the British-Irish Parliamentary Assembly, Niall Blaney TD, has congratulated all those involved in Derry's successful bid to be the first UK City of Culture in 2013.

Deputy Blaney said that this award will provide a wider economic boost to the entire North West region.

He paid particular tribute to the role of the US Special Economic Envoy to Northern Ireland, Declan Kelly, who addressed last February's BIPA plenary in Cavan where he outlined his commitment to Derry's bid.

Mr Blaney commented, "The potential of this award for Derry, the border area, and the entire region is hugely significant. In the build up to and during 2013 local people will be able to benefit from new employment and investment opportunities at a time of great need.

"The work and effort that went into such a tremendous bid must be capitalised upon to avail of this great opportunity."

ENDS

Blaney and Murphy condemn car bomb attack in Newry

Tue, 23 Feb 2010 00:00:00 +0000

Commenting at the close of the 40^th plenary conference of the British Irish Parliamentary Assembly in Cavan this morning, the Assembly Co-Chairs, Niall Blaney TD and Paul Murphy MP, said the conference had been one of the most successful of recent years.

However, the Co-Chairs also took the opportunity to condemn in the strongest terms last night's car bomb in Newry, and said that those responsible represented a past that all those involved in the Assembly were working to emerge from.

Deputy Blaney and Mr Murphy also said that the contributions made by all guest speakers and members of the Assembly made positive contributions on the conference theme "Towards Economic Recovery."

The conference heard this morning from the US Special Economic Envoy to Northern Ireland, Declan Kelly, who briefed members on his work in attracting investment in Northern Ireland. Mr Kelly's address followed contributions by the Taoiseach, Brian Cowen TD, yesterday, along with the Governor of the Central Bank, Professor Patrick Honohan. The PSNI Chief Constable, Matt Baggott, and the Garda Commissioner, Fachtna Murphy, also spoke to the Assembly yesterday.

Deputy Blaney commented, "This conference heard from a range of high-profile speakers. Our focus was on finding real and practical solutions to the economic challenges that confront all of us, Irish and British alike. The contributions of the Taoiseach, Professor Honohan, and Declan Kelly specifically focussed our minds on the economy, and I would support the Taoiseach's assertion that recent tough decisions taken with regard to the banking sector and the establishment of the National Assets Management Agency were required to stabilise our economy.

"As Declan Kelly said today, we are entering a more positive era, and we must harness the goodwill towards Ireland that exists in the United States of America to identify and encourage investment and development on both sides of the border."

Mr Murphy added, "Yesterday's joint address by the PSNI Chief Constable and the Garda Commissioner was a highly significant moment - something that would not have been imaginable when the Assembly first met as the British Irish Parliamentary Assembly 20 years ago.

"In this regard, I would like to take the opportunity to condemn in the strongest terms last night's car bomb explosion in Newry. Those responsible clearly set out with the intention to kill and injure, and we should provide the PSNI and the Garda with as much support as possible in their work against dissidents.

"Those responsible represent a grim past that all of us involved in the British Irish Parliamentary Assembly have been working for two decades to emerge from."

ENDS

Address by Declan Kelly, US Special Economic Envoy to Northern Ireland, to 40th plenary of BIPA

Tue, 23 Feb 2010 00:00:00 +0000

Thank you for this opportunity to address you here today. In the past month Northern Ireland found itself at yet another crossroads, one of many it has faced in its recent past. The choices it faced were complex as always, but at the end of the day they became very simple, a choice between progression and regression, a choice between moving forward and moving backward, a choice between leaving the past even further behind or allowing it to prevent the region from moving forward. I and the U.S. government and all of you I am sure were very glad to see that in all of these choices the political leaders of Northern Ireland choose the right path yet again. The path that we all believe now leaves Northern Ireland extremely well positioned to take advantage of the opportunity that lies ahead. I know that many people in this room worked extremely hard over the last several weeks and months to help make that outcome possible and I congratulate and thank you for your resilience and your belief in the same possibilities.

Throughout this journey the United States has stood with the people of Northern Ireland every step of the way. Successive U.S. administrations and political leaders have supported the peace process and made clear that a lasting peace was a goal worth pursuing not only to end the hostility, but because by achieving devolution and a peaceful Northern Ireland, a new economic future could be made possible for all citizens of Northern Ireland.

Northern Ireland has no greater friend than Secretary of State Hillary Clinton, who has been committed to helping the peace process through an economic platform. Her belief that peace and prosperity work hand-in-hand, led to my appointment as Economic Envoy last September. She visited the region last October and has stood firm in her long-standing commitment to a lasting peace. The Secretary spoke repeatedly with the parties to express the importance of reaching an agreement on the devolution of policing and justice. Secretary Clinton has vowed that the United States will continue working to help Northern Ireland reap the dividends of peace. As I have said many times in public before, where there is certainty and stability, prosperity will follow. Our job now is to work together to help make that prosperity a reality.

I am glad to say that as we work together to promote economic development between the United States and Northern Ireland, several major initiatives are already underway. On the week of March 15th, First Minister Robinson and deputy First Minister McGuinness will travel with me to Chicago, New York City and Washington D.C. where they will meet with President Obama at the White House and also have discussions with Secretary Clinton and myself on how we can now work together to do even more to promote Northern Ireland's economy. There will also be meetings with major U.S. corporations and large scale events all designed to help Northern Ireland fully grasp this momentous opportunity.

I took this job because I care deeply about Northern Ireland and its future, but also because I truly believe Northern Ireland is one of the places in the world that is best positioned to take advantage of the current political and economic climate, in a way that will enable it to grow and to compete with the very best.

The world today is filled with economic and political uncertainty, but remember that it is also filled with massive opportunity.

In terms of economic development, there are several trends that will drive innovation and economic growth for years to come. They are predominantly in healthcare, renewable energy, technology and financial services. This is very good news for Northern Ireland because it is ahead of the trend curve in all four areas:

Healthcare
North America will spend an estimated 15.5% of its GDP on healthcare this year - It is estimated that Western Europe will spend 12.2%. With an aging global population, these numbers will continue to rise and the demand for innovative healthcare solutions will grow even more profoundly. Northern Ireland has the universities, and skilled workforce to be a leader in many specific medical fields including connected health and personalized medicine. We are working with Queen's University, Almac, and Invest NI to plan an event in Washington D.C. during St. Patrick's week showcasing the important research the company is doing.

Renewable Energy
With respect to renewable energy, in the future - developed nations will face two major issues, how to deal with increased energy demand from emerging economies and how to handle the environmental impact of fossil fuels. More immediately, in the wake of the financial crisis, by some accounts up to 15% of global stimulus spending has been allocated to renewable energy projects - this spending opens a huge opportunity for Northern Ireland and the several companies already focused on becoming leaders in the renewable energy space.

Technology and Telecommunications
Technology and telecommunications generally represent one of the best growth opportunities for Northern Ireland over the next decade, in my opinion. With its existing excellent telecom infrastructure and the fact that it is already ahead of the game with initiatives like project Kelvin, there is every reason to expect Northern Ireland can profit more than most from what is happening in this sector. An average of 80 out of every 100 people in the world has a mobile phone. There will be over 530 million broadband subscribers in the world this year. In North America, 974 out of every 1,000 people are expected to own a PC this year. In Western Europe it will be 688 out of every 1000. Northern Ireland has an established track record of attracting foreign investment from technology companies and the region is well known for its expertise in software development so now is a moment of great opportunity for those companies to take advantage of what's going on in the world today.

Financial Services
Financial services will continue to be a very important sector for Northern Ireland's future growth. The region has already attracted many prominent companies including NYSE Technologies which added over 400 new jobs last year. In the wake of the financial crisis, as financial services firms consider new strategies, there are now new opportunities to attract business to the region

To be competitive in the global economy a region must develop strengths in these specific sectors - by using a collaborative approach that can leverage the synergies of science, academia, business and other fields, Northern Ireland has the potential to become one of the world's fastest growing economies on a per capita basis.

Now is the time to focus on the work ahead. And, with the help of several partners, we are hard at work to help promote investment and trade between the United States and Northern Ireland.

One of our first initiatives was to set up a bi-lateral Working Group to advise and support me in this mission - one group made up of 22 leading business figures from the U.S. and one in Northern Ireland with 15 senior business leaders. Between these two groups, the members run businesses worth tens of billions of dollars and have expertise spanning the spectrum of multiple industries.

The ultimate goal is to help foster initiatives leading to long-term and short-term results that provide mutual benefit to the economies of both Northern Ireland and the United States. To accomplish this, work is underway in many areas to increase visibility and awareness of Northern Ireland as a world-class business location.

The strategy is being implemented using a dual track approach; a Momentum Track and a Leadership Track.

The Momentum Track, is designed to develop and leverage a wide range of initiatives in the short term, which will help shine a light on Northern Ireland and showcase all the region offers with regard to foreign direct investment and trade. This is being done through a variety of means including ongoing site visits, trade missions, road shows, special events, and media opportunities.

On one day alone last December, a roundtable between Enterprise Minister Foster, Invest NI, myself and over a dozen major companies, many from the fortune 500, took place in New York. The nine publicly traded companies at the meeting had an aggregate market capitalization in excess of $575B and revenues of more than $200B. We are confident that these discussions have the potential for significant investment in Northern Ireland.

To increase trade, we are also working with both U.S. and Northern Ireland companies on export and procurement matters on a daily basis.

During St. Patrick's week, we will help lead an economic mission to the U.S. with the First Minister and Deputy First Minister and Minister Arlene Foster in three key U.S. cities namely Chicago, New York and Washington D.C. to highlight Northern Ireland to potential trade partners and investors. This mission will include meetings with major U.S. corporations and several large scale events all focused solely on Northern Ireland. The week will also include a concurrent strategic mission, with up to 20 Northern Ireland companies attending meetings in the U.S. to open up potential new business partnerships.

Those companies will be drawn from throughout Northern Ireland, and I think this is an important point, because in our work we are very focused on making sure that every time I come to Northern Ireland I visit a different part of the region and I am very focused on making sure that any initiatives we are able to get underway are spread appropriately throughout.

There are plenty more opportunities to spread Northern Ireland's message, and I intend to utilize them all and create many more if possible. In the U.S. there is a real sense that the momentum is with Northern Ireland. The Government and Invest Northern Ireland have created close to 1,000 jobs from outside companies, including U.S companies in the last four months alone. The U.S. is paying attention. Now is the perfect moment to harvest what you have sown.

However we also need to be vigilant. In the past several weeks we have seen, even on the same day that good news was announced with regard to new jobs for Northern Ireland, potential job losses were on the horizon elsewhere in the region. This is the reality we are living with today in every country and region in the world and it is not unique to Northern Ireland alone. Even notwithstanding the higher relative percentages of public sector employment in Northern Ireland, the region is doing extremely well on a per capita basis in attracting foreign direct investment and creating jobs that have long term sustainable potential.

The second part of our twin-track approach is the Leadership Track. This is a longer-term approach focused on planning and implementing projects that can be developed and grown over time. Key initiatives include the promotion of micro clusters, centers of excellence, mentorship programs, advisory boards, indigenous development, and other long-term development strategies all designed to leave a lasting impact on the region.

Northern Ireland has already recognized that building niche expertise in micro clusters like connected health, renewable energy, life sciences and creative media offer tremendous growth potential for the future.

In the area of healthcare, the Oncology Hub created at Queens University Belfast is a world-class research and development facility conducting extraordinary work in the area of Personalized Medicine. I will be visiting the Queens University Belfast Centre for Cancer Research and Cell Biology later this afternoon.

The European Connected Health Campus is leading the way in terms of 21st century preparedness for remote access patient care, which without any doubt is going to become part of our future reality.

A very active film industry opportunity is also developing. This includes not only filming and production, but also software development. Hollywood veterans - now back in Belfast - are working virtually from Northern Ireland on academy award nominated films, and that is just one example.

I am also focused on indigenous development and specifically on capital accessibility and workforce development to help promote the growth of Northern Ireland enterprises. Northern Ireland is home to over 66,000 small entrepreneurial companies, each with 20 employees or less. It is vital for Northern Ireland's future economic growth to focus on developing programs and models that support small business because this is the engine that can and will ensure that the local economy is able to drive itself forward.

I believe for example, Northern Ireland, can develop a center of excellence in microfinance, as I have said, to help support the region's small businesses by providing new means of access to credit. This is just one of many opportunities for Northern Ireland to promote local development.

The Northern Ireland Science Park - through its NISP Connect program -is creating collaborative opportunities for start-up technology companies through mentorship and advisory boards. We are working very hard to support them in their efforts through some form of transatlantic endowment initiative that reflects the core value set of Steve Orr and his colleagues at the Science Park and we hope to make further progress on this in the not too distant future.

The establishment of a renewable energy incubation center in Limavady is also being explored by a member of the Working Group Richard Hogg. The center would work in conjunction with local universities, and provide space for innovative startup companies to design the renewable energy projects that can help make Northern Ireland a world leader, and I believe Richard and everyone like him is worthy of all our support to ensure that their dreams become a reality.

The final focus of the leadership track is to develop lasting linkages between the United States and Northern Ireland. These linkages provide a two-way street for the exchange of commerce, trade, technology and culture. We are working across multiple industries and partnerships to help foster these linkages in as many ways as possible.

As we continue to execute our plan with the Working Group and other partners, you will not always hear or read about the work we are doing, but that is not important. The truth is we are trying to do dozens of things every day to advance the mission. By adopting the two-track plan we are aiming to balance short term initiatives with long term projects that will take time, but we believe will be very valuable in terms of Northern Ireland's future.

For the past two days, you have discussed in great detail the most appropriate steps to be taken for economic recovery. In the midst of these challenging economic times the good news is that Northern Ireland has already made one important choice. The more important news is that it faces another one now: how quickly does it want to recover?

Throughout history, during times of chaos or crisis, entrepreneurs and innovators have benefitted and taken advantage of similar opportunities to create new businesses. I believe we are living in the middle of such an opportunity right now and I believe that if the right steps are taken, by all of us working together, we can exploit that opportunity for Northern Ireland's advantage like never before.

Recovery will come by taking advantage of this moment to create long-term sustainable development through supporting innovative, entrepreneurial companies in the sectors that will drive the global economy in the future.

With regard to the global economy, there have been signs of recovery: The Dow Jones Industrial average has recovered from a low of around 6,500 last March to around 10,000 a year later. Global GDP, which declined by 2.2% in 2009 is expected to grow 2.7% this year. Global trade, which fell by over 14% last year, is expected to grow 4.3% this year. The corporate profits of the S&P 500 are by some estimates expected to grow by 29% in 2010. So, while situation remains volatile, the world economy, like Northern Ireland itself, is moving in the right direction.

Regardless of what is being reported, it is up to each one of us to take the future into our own hands and make this recovery happen. Northern Ireland is already well positioned for this new reality we live in and by focusing on specific sectors and building the foundations for long term economic growth; it can achieve true and lasting economic prosperity.

Northern Ireland at this time is all about the future. The future is now. Why do I believe this? Because of the advantages you have as an economy. A highly educated, skilled, and English speaking workforce, superb telecommunications infrastructure, close proximity to Europe and the United States, a low cost operating environment and much, much more.

To use a sporting analogy, you are in injury time and you have the opportunity to put the ball in the back of the net. This is the moment right now, to score the goal.

Franklin Roosevelt once said "The only limit to our realization of tomorrow is our doubts of today." There should be no doubt about the opportunities that now exist for Northern Ireland, and we should go forward with confidence and belief in the fact that, for Northern Ireland, the time really and truly is now. Let's make sure we can continue working hard together to bring that opportunity sharply into focus for all to see. Thank you.

BIPA Committee calls for new approach for back to work schemes

Tue, 23 Feb 2010 00:00:00 +0000

The Environment and Social Affairs Committee of the British-Irish Parliamentary Assembly has presented a report and recommendations on "Returning the Unemployed to Work" to the 40^th plenary conference of the BIPA in Cavan.

The report calls on governments in the United Kingdom and Ireland to review and amend a number of policies designed to reduce unemployment in Britain and Ireland, in particular changing specific "back-to-work" schemes to make them more innovative, inclusive and tailored to the needs of local communities. The Committee looked both at the long-term unemployed, as well as those made unemployed as a result of the recession.

As part of the Committee's investigation, members visited Rhyl in north Wales where the Rhyl City Strategy operates as one of 17 UK schemes to tackle unemployment in areas where it is most entrenched. The Committee was of the view that the results-driven focus of the Rhyl City Strategy provides a good model for bringing together businesses and the local community to tackle long term unemployment in particular black-spots.

Other recommendations in the report include:

Reviewing the "16-hour rule" in the UK which prevents those on Jobseeker's Allowance from working longer than 16 hours without losing their benefit
Simplifying and reducing the number of back-to-work schemes to make them more accessible to the unemployed
That the UK Government reviews the age range of the Future Jobs Fund to consider including 16 and 17 year olds
Changing public sector procurement policies to give weight to those contracts offering employment stimulus as opposed to lowest price.

Commenting on the report, the Chairman of the Committee, Lord Dubs, said "As a result of the global economic downturn unemployment in Britain and Ireland has increased significantly. In the United Kingdom unemployment stands at 7.8%, while in Ireland the level is around 12.5%. The recession has affected manual workers, professionals and graduates alike, and while there is some optimism that we are emerging from the worst of the downturn, history tells us that unemployment may linger for longer.

"Accordingly, we have presented a series of specific recommendations that are designed to improve back-to-work schemes and encourage more people into the workforce. This includes lowering the age of entry to these programmes, and ensuring that the focus is on the needs of local communities.

"Jobs are clearly a priority issue for families and communities throughout Ireland and Britain. We urge governments in the United Kingdom and Ireland to act on our recommendations to help unemployed people to return to work as soon as possible."

ENDS

Address by Professor Patrick Honohan to British Irish Parliamentary Assembly

Mon, 22 Feb 2010 00:00:00 +0000

I can think of no better topic for an address to the British-Irish Parliamentary Assembly than the similarities and contrasts between the performance of our intertwined economies before and during the global economic crisis. Economic activity and employment have contracted sharply and property prices have plunged. Our economies have been hit hard by the global financial crisis but in addition, for all of us, the crisis has served to expose strikingly similar pre-existing vulnerabilities in our economies - not shared by most others in Europe - which would sooner or later have led to trouble even if it had not been for the global meltdown, notably:

the wide-ranging imbalances created by a credit-fuelled property boom;
the growing dependence of the financial sector on wholesale market-funding, increasingly in the form of foreign borrowing, and
the extent to which the credit and property booms significantly boosted transitory windfall tax revenues, which came to be relied on to finance strong growth in public spending.

While the economy of the Republic of Ireland was the more vulnerable, and has been hit much harder, I think that these parallels are no coincidence. Indeed, the involvement of banks from each side in funding the property boom of the other is an interesting dimension of the pre-crisis bubble. This of course reflects the fact that our economies have long been intertwined on a broader front.

As we begin to recover, though, there is one important emerging contrast. Inflation has been persistently negative in the Republic for over a year, reflecting the unwinding of the bubble against the background of a strong currency. But UK prices have been rising and the international value of sterling has been at historic lows. The contrasting exchange rate, price and wage environment presents its own difficulties, not least for Irish businesses struggling to remain cost-competitive, especially when wages had edged up to uncompetitive levels in the last years of the boom.

Fiscal policy

Even before the global crisis metastatized in September 2008, Ireland's fiscal position was coming under pressure, not just because of an accelerated expansion of spending in the previous few years, but especially because of the sharp fall in tax revenues which began soon after the property prices started to turn down.

To elaborate, the marked deterioration in the Irish fiscal position in recent years reflects in part the effects of strong growth in public spending first during the boom years, and then resulting from the demands imposed by the jump in unemployment. But a much more significant driver has been sharp collapse in tax revenues. The scale of the latter has been remarkable. The tax take, having averaged over 24 per cent of GDP in the first seven years of the new millennium, collapsed to barely 20 per cent of a greatly reduced GDP by 2009. This reflected a fundamental weakness in the tax structure and, in particular, an excessive reliance on revenues related to the value of property transactions.

Looked at more broadly, this was the continuation of a trend that has been evident over the past two decades, which has seen a systematic shift away from more stable and reliable revenue sources such income tax, VAT and excise taxes, towards more cyclically sensitive taxes. The result was more and more dependence on corporation tax, stamp duties and capital gains tax as sources of revenue; the contribution of this group of taxes grew from about 7 per cent of total tax revenue in 1987 to over 35 per cent two decades later. The buoyancy of these taxes during the boom period facilitated both a reduction in the income tax burden and the numbers in the tax net. It also financed a strong and persistent rise in public spending. While reliance on 'boom time' taxes made these developments possible for a time, it left the fiscal position particularly exposed to a downturn. It also meant that fiscal policy was effectively operating in a pro-cyclical manner during this period and was itself stoking the boom. (Indeed, it has recently been estimated that the contribution of the residential property market to total tax revenue through VAT, stamp duty and capital gains alone more than doubled to over 12 per cent in the seven years to 2006, Addison-Smyth and McQuinn, 2009)

There is also the issue of the extent to which the nature and design of the tax system itself partly fuelled the construction boom. Tax incentives for developers and homeowners have long been a feature of the Irish taxation system and must have contributed significantly to the oversupply of houses which now exists, especially in parts of the country where underlying demand is likely to remain weak for many years to come.

The impact of the subsequent collapse in what were in reality largely windfall revenues can be gauged from the fact that, since 2007, total tax revenues have fallen by 30 per cent, while the combined receipts from stamp duties, CGT and corporation tax have fallen by 58 per cent over the same period. In total, just over half of the revenue loss since 2007 reflects declines in these three categories.

Along with the collapse of tax revenues, an expansion of Government spending - partly driven by policy, partly by the automatic response to a deteriorating output and employment situation - resulted in the sudden emergence in Ireland of a sharp fiscal deficit, after years of surpluses.

I don't need to dwell today on the robust, measured and appropriate policy response in Ireland that has stemmed and begun to reverse this fiscal set-back. Instead, I want to note the striking extent to which UK fiscal trends up to 2009 have paralleled, albeit in a more muted way, those of Ireland.

As I understand it, the recession in the UK has also been characterized by a fall-off in tax revenues and a rise in spending which, though not quite as sharp as in Ireland, have together resulted in the emergence of a deficit of comparable proportions as a percentage of GDP (in this case following a number of years where the deficit ran at around 3 per cent).

UK tax revenue too has been sensitive not only to the economic cycle, but also to the level of housing market and financial sector activity. In terms of corporation tax, for example, revenues from the financial sector have typically accounted for around 25 per cent of the overall corporation tax take, while the housing sector has provided revenue in much the same way as I have described for Ireland. UK Treasury estimates suggest that receipts from taxes linked to these two sectors rose from around 3 per cent of GDP in 2002-03 to 4¼ per cent of GDP by 2007-08 and accounted for around half of the increase in total current receipts over this period. Receipts from the two sectors are projected to decline to around 2¾ per cent of GDP in the current fiscal year, down by over one-third as a share of GDP. Public spending has also been growing, not least designed to offset some of the downturn in other spending.

In summary, in both countries, the collapse of the housing and credit booms has had a major impact on the public finances. For Ireland at least, the lesson has been that our taxation system needs to be on a firmer footing than in the past.

British and Irish banks and the property bubble - home and abroad

While tax incentives undoubtedly played a part in the Irish story, however, it was banks that primarily fuelled the property bubble. In short, there was too much bank lending, financed by heavy foreign borrowing; this funded an unsustainable construction and property price boom. To expand credit on the scale which happened, banks leveraged their deposits with sizeable borrowings from abroad. Funds were readily available in a global economy awash with surplus savings, with increasing possibilities for securitisation and helped by the absence of exchange rate risk on euro borrowings. Without large-scale foreign borrowing by the banks, the property boom could not have grown as it did.

Irish banks also engaged in extensive lending to finance projects outside of Ireland, though, in practice, this offered them little real diversification. Such lending was once again largely focussed on property-related activities, quite often involved Irish residents and tended to be concentrated on markets which were strongly correlated to Ireland. Consequently, overinvestment in property by Irish people was not confined to this country; the boom period also saw strong expansion in overseas property investment, particularly commercial property. Much of this investment was concentrated on the UK. While comprehensive data on the scale of such flows (lending for investment in UK property market) is not published, industry estimates suggest that up to half of such commercial investment went to the UK and that, during this period, Irish investors accounted for a not insignificant share of activity in the UK commercial property market.

While the expansion of Irish banks stands out for the scale on which these things occurred, it is clear that this experience was not unique. Global financial conditions were characterised by an abundance of liquidity and very low risk aversion across most markets. Ireland was not the only banking market which expanded by lending for property. A similar pattern was seen in the UK, where a similar combination of macroeconomic imbalances and financial sector developments, accompanied by a similar lowering of credit standards, drove rapid expansion of credit. To be sure, the British financial sector is much larger and more complex than that in Ireland. Nevertheless, a significant part of its expansion in the mid-2000s was related to funding of the property market. It has also been argued that accounting standards designed to reflect observable facts and limit the role of judgement as to future possibilities and risks, further contributed to pro-cyclicality in credit provision and pricing. The increase in property prices in Britain was not far behind that in Ireland, though the construction boom was much less pronounced, limiting the scale of the subsequent overhang. Nevertheless, as we all know, several sizable British banks got into difficulties too and had to be intervened or rescued.

Both the Irish and British banking systems are unusually international in character. For the Irish banks, a key part of their international activities relates to their long-standing and sizable presence in the UK - going well beyond their clearly central role in Northern Ireland. And the wide global reach of the largest British banks is an important aspect of London's continued role as a leading global financial centre hosting a deep and complex matrix of financial activities. Unsurprisingly, during the boom period, growth in the UK-owned financial sector was not just confined to the UK itself.

Indeed, bank competition in Ireland was strikingly influenced by the decision of one UK-based bank (HBOS) to expand more vigorously into the Irish mortgage market with especially keen pricing (though I would stress that it was not the most aggressive competitor in the Irish market). This bank's actions had the initially favourable effect of reducing lending margins and introducing new products, such as the tracker mortgage, which assured borrowers that interest rate changes on floating rate mortgages would not be arbitrary. These innovations were subsequently adopted more widely, by both Irish controlled and foreign controlled banks in Ireland, as was an extensive reliance on wholesale funding.

Indeed, without questioning the largely-home-grown nature of the Irish credit bubble, it may well be that the rapid - and ultimately unwise - expansion of some of the UK banks both at home and in Ireland may have helped to lull Irish observers into a sense of false security. (The same might be said of the property price surge that was going on in parts of Britain).

At any rate, these new lending features became unsustainable in Ireland once the global financial crisis broke, with the scarcity and increased cost of wholesale funding to many banks undermining the profitability of tracker mortgages. Not surprisingly, both of the big British banks that have suffered most in the crisis (HBOS and RBS) have - like the locally controlled banks - reported a severe loan-loss experience on the lending of their Irish subsidiaries.

Both countries have acted decisively to protect crucial but weakened segments of their banking systems. Extensive asset insurance (UK) and asset purchase (Ireland) schemes have been put in place and government has injected capital into major banks on both sides of the Irish Sea, nationalizing some of them. The Irish measures will soon be completed when the major asset purchases of NAMA are finalized, and the main banks are recapitalized, at least in part with further investments by Government. While the scale of the Irish measures is larger than those in Britain, and the design of the measures different in detail, as is warranted by the contrasting nature and scale of the distressed assets held in the two banking systems, their broad outlines have striking similarities.

I am confident that these measures will succeed both in confirming the solidity of the banks, and in further restoring confidence in the finances of the State, free as it will then be of any shadow of prospective commitments to the banks.

Since the outbreak of the crisis, banks have tended to withdraw from international commitments, reflecting not only a broad upswing in what is often termed "home bias" in finance, but also the intensified pressure to deleverage - a pressure which has been considerably reinforced by the decisions of the European Commission, concerned to prevent State aid to banks from distorting banking markets. In line with these trends, the new management of HBOS has recently moved to retrench its Irish operations, closing its retail branch network here, a decision which is understandable though disappointing. I am glad to have been reassured of the determination of Ulster Bank - the RBS subsidiary - to remain in Ireland for the long haul. I feel sure that this commitment will be rewarded over time, and I would like to take the opportunity to emphasize how much we welcome the presence of British and other foreign banks providing financial services in Ireland.

Wage competitiveness

If, on the other hand, we are to seek contrasts, we need look no further than to wage, price and exchange rate developments. Clearly, wage competitiveness is a key to restoring economic activity and reversing the rise in unemployment. This aspect of competitiveness deteriorated significantly in Ireland during the boom, and, given the fact that euro-area inflation will continue to be low in the years ahead, recovering wage competitiveness in the short run must depend largely on containing and indeed reducing nominal wage rates - as indeed has already formed part of budgetary strategy. Though tough, this should be somewhat less painful than might appear at first sight, given the fact that inflation in Ireland has been negative now for well over a year - quite a contrast with the UK, where inflation currently exceeds the official target. Even indebted households may, for the present, be better able to absorb nominal wage cuts to the extent that most floating mortgage rates are currently still lower than they were before the crisis. It's a different matter, of course, for the many affected by unemployment.

In contrast, international wage competitiveness of the UK has been strongly assisted by the weakness of sterling since the crisis began (albeit at the cost of rising inflation). The sharp decline in the value of sterling, especially from late 2007 to early 2009, has of course been inconvenient, to say the least, for businesses in the Republic exposed to UK competition - and let's not forget that we have long been and are still among the UK's largest trading partners. The contrasting exchange rate regimes and policies have certainly complicated life. Achieving cost savings sufficient to offset the exchange rate movement - albeit partially mitigated by higher UK inflation - has proved difficult, as is well understood by businesses in border counties such as Cavan.

Achieving lower nominal wage rates is not easy. But it is undoubtedly an essential component of a pro-employment recovery strategy for Ireland - and not simply a means of achieving budgetary savings. I want to end with this message, as I think that it is both the most important policy message that I can deliver in the current environment, and one which highlights in a dramatic way the similarities, contrasts and interdependencies of the economies of the Republic of Ireland and the United Kingdom, as we both face the volatilities and surprises of the globalized world.

ENDS

Central Bank Governor & US Special Economic Envoy to address upcoming plenary conference

Fri, 12 Feb 2010 00:00:00 +0000

The Governor of the Central Bank, Professor Patrick Honohan, and the US Special Economic Envoy to Northern Ireland, Declan Kelly, will address the upcoming 20^th anniversary plenary conference of the British Irish Parliamentary Assembly in the Radisson BLU Farnham Estate Hotel, Cavan, Monday 22nd - Tuesday 23rd February.

Professor Honohan and Mr Kelly will speak on the conference theme of "Towards Economic Recovery" that will also be addressed by the Taoiseach, Brian Cowen TD, in a keynote speech on Monday afternoon.

The Chief Constable of the Police Service of Northern Ireland, Matt Baggott, and the Commissioner of An Garda Siochana, Fachtna Murphy, will also address the Assembly on policing co-operation North and South.

The two-day plenary conference will mark the 20^th anniversary of the Assembly that was first convened as the British-Irish Inter Parliamentary Body in London in 1990.

The provisional agenda for the conference is:

British Irish Parliamentary Assembly - 40^th Plenary Session

Monday 22nd - Tuesday 23^rd February, Radisson BLU Farnham Estate Hotel, Cavan

Monday 22^nd February

9.30am: The Economy and the Banking Sector - Professor Patrick Honahan, Governor of the Central Bank

11am: Co-operation in Policing - Matt Baggott, Chief Constable of the Police Service of Northern Ireland, and Fachtna Murphy, Commissioner of An Garda Siochana

3pm: Towards Economic Recovery - An Taoiseach, Brian Cowen TD

Tuesday 23^rd February

9.30am: The Economy and the United States of America - Declan Kelly, US Special Economic Envoy to Northern Ireland

Media outlets are welcome to attend or send a representative to the plenary conference. Those attending are requested to contact Ronan Farren, Q4 Public Relations, for further information, accreditation and to make the necessary arrangements.

ENDS

Blaney and Murphy welcome policing and justice deal in Northern Ireland

Fri, 05 Feb 2010 00:00:00 +0000

The Co-Chairs of the British-Irish Parliamentary Assembly, Niall Blaney TD, and Paul Murphy MP, have wholeheartedly welcomed the deal on the devolution of policing and justice powers to the Northern Ireland Assembly by 12th April. Deputy Blaney and Mr Murphy said the deal put in place one of the final pieces of the jigsaw in a process that began almost 20 years ago.

The Co-Chairs also welcomed the financial package to support the transfer of policing and justice, and the announcement from the US Secretary of State, Hillary Clinton, that there will be a major economic conference for Northern Ireland in the Spring.

Deputy Blaney said "I wish to pay tribute to the work of the Taoiseach, the British Prime Minister, the Minister for Foreign Affairs, the Secretary of State for Northern Ireland, and all the political parties in the North who contributed to today's agreement.

"While the process was not straightforward, the perseverance displayed by everyone - and the determination of the Taoiseach and Prime Minister in particular - demonstrates their commitment to creating the more peaceful and democratic Northern Ireland that its people deserve."

Mr Murphy added, "As a former Secretary of State for Northern Ireland, I know the work that goes into these negotiations. I believe that one of the last remaining hurdles to securing the long and lasting peace in Northern Ireland that we have been working towards for so long.

"With policing and justice now hopefully concluded, we can now concentrate on confronting the major social, environmental, and economic issues that confront us all. In this regard, today's deal creates an extremely positive backdrop to the upcoming 20th anniversary plenary conference of the British-Irish Parliamentary Assembly in Cavan later this month (22nd-23rd February) when the Taoiseach will give a keynote address on the economy."

ENDS

Taoiseach to address 20th anniversary plenary conference in Cavan - 22nd-23rd February

Mon, 01 Feb 2010 00:00:00 +0000

The 40th Plenary Conference of the British-Irish Parliamentary Assembly* will take place from Monday 22nd - Tuesday 23rd February at the Radisson BLU Farnham Estate Hotel, Cavan.

The two-day plenary conference will mark the 20th anniversary of the Assembly that was first convened as the British-Irish Inter Parliamentary Body in London in 1990.

The theme for the Conference is "Towards Economic Recovery" and the Taoiseach, Brian Cowen TD, will make a keynote speech on the economy to the Assembly on Monday afternoon.

The banking crisis and policing co-operation North and South will also be discussed by the Assembly. Further details of other high-profile speakers will be available in due course.

Media outlets are welcome to attend or send a representative to the plenary conference. Those attending are requested to contact Ronan Farren, Q4 Public Relations, for further information, accreditation and to make the necessary arrangements.

ENDS

Environment and Social Committee visits Rhyl to see back-to-work schemes

Wed, 25 Nov 2009 00:00:00 +0000

A delegation from the British-Irish Parliamentary Assembly's Environmental and Social Affairs Committee this week visited Rhyl in North Wales as part of the Committee's ongoing inquiry into schemes and projects operating in the UK and Ireland designed to return unemployed people to the workforce.

The Committee's focus was on the Rhyl City Strategy, one of 17 UK schemes to tackle unemployment in areas furthest from the Government's aim of 80 per cent employment.

Rhyl is the smallest of the City Strategy areas, which generally cover major cities and urban areas. Despite this, Rhyl contains the poorest ward in the United Kingdom, which has an unemployment rate over 50 per cent.

The Committee visited a number of places on the front line of poverty in Rhyl, and spoke to those working closely with the most "hard to reach" groups.

In particular, the Committee spoke to people at Rhyl Hub, which provides education, training and leisure for young people in one of the poorest areas in Rhyl. They also visited Rhyl Football Club, which runs a scheme to train those off work, and Rhyl College, which has a number of programmes for training people and returning the unemployed to work. In addition, the Committee heard from those on the Board of the Rhyl City Strategy and the Welsh Assembly Government.

Commenting on the visit, Lord Dubs, Chairman of Committee D, said "The Committee saw for itself a number of first class projects aimed at helping the unemployed get back to work. The Rhyl City Strategy is exciting and effective. We were impressed by the good cooperation between the voluntary sector, businesses, Rhyl College, local government and the Welsh Assembly Government. Above all we felt that there were a number of really dedicated people who were helping disadvantaged youngsters to find work."

The Committee will be undertaking similar visits to Belfast and Dublin, and will report to the British-Irish Parliamentary Assembly meeting in Cavan in February.

ENDS

BIPA Co-Chairs seek meetings with British and Irish Governments on Common Travel Area

Tue, 20 Oct 2009 00:00:00 +0100

The Co-Chairs of the British Irish Parliamentary Assembly, Paul Murphy MP and Niall Blaney TD, have written to the British Home Secretary, Alan Johnson MP, and the Irish Minister for Justice, Dermot Ahern TD, seeking meetings to discuss new passport controls for persons travelling into Britain from Ireland, the Isle of Man, and the Channel Islands.

Mr Murphy and Deputy Blaney have sought these meetings following a lengthy discussion about the Common Travel Area at the 39^th plenary session of the British Irish Parliamentary Assembly in Swansea earlier this week. Following the session, the two Co-Chairs resolved to discuss the issue with their relevant Ministers and report on the concerns expressed by BIPA members.

Paul Murphy commented, "In the course of our discussions on the Common Travel Area, the issue of passport controls and the requirement to show a passport when travelling into Britain from Ireland, the Isle of Man and the Channel Islands emerged as a major issue.

"There is major confusion over what forms of identification are required when travelling through airports and ports. On the one hand, we have a Common Travel Area between Britain and Ireland that should grant people freedom of movement, yet on the other, individual airlines and airports require people to show their passports when passing through.

"Legislation on the issue has been brought forward on a number of occasions, but there is a clear need for consultation between both Governments on this. Therefore I am seeking a meeting with the Home Secretary to discuss this issue."

Deputy Blaney commented, "On Monday, the Welsh Secretary, Peter Hain MP, said that the British Irish Council would examine the current system. This must be complemented by an investigation by, and consultation between, the relevant Government Ministers.

"Therefore, as Co-Chairs of the BIPA we are seeking to represent the views expressed by members of the Houses of Parliament, the Oireachtas, and each of the devolved institutions, in Swansea, by urging consultations between the two Governments.

"We anticipate having an opportunity to discuss this with our Ministers before Christmas, and to report back to the Assembly at our next meeting in Cavan in February."

ENDS