Wake-up call for Northern Ireland - Ireland's December budget

While the South of Ireland wakens to a nightmare moment of truth, the North is sleeping like a baby - a very fat baby.


This week's media portrays the Republic of Ireland as an economic basket-case, with an upcoming budget in December which will attempt cuts of €4 billion, not as a stimulus for recovery or to reduce state borrowing but only to stabilise the current account.



Frankly, the Government has no room for manouvre, yet special interest groups from the unions and the public sector are marching in vitriolic opposition to cuts, creating the real spectre of civil unrest to add to the economic woes of our nearest neighbour.


In real terms, the North is in exactly the same boat as the South right now but the politicians at Stormont just tinker at the edges of solving the potential economic disaster.


However bad the short-term prospects in the Republic, at least the debate is making headlines and external pressures are forcing Government actions. These may hopefully result in their regaining international competitiveness through the longer-term expansion of a resurgent private sector.



Despite significantly weaker underlying economic strength, together with endemic market failure, the North sleeps on under the soporific influence of Westminster's £7 billion drug infusion. Parish-pump politicians in Stormont blissfully ignore the potential danger of this supply lifeline being significantly reduced in the future.



The economic structural and systemic failure of NI should be the number one issue for businesses, unions, politicians and society right now - for the paradoxical reason that technically, with sterling's recent effective devaluation, the North's private sector is currently in a strong position to increase overall exports.


But these conditions will not produce any material gain in total for NI, despite many economists' predictions that on the back of exchange rate competitiveness, Britain's exports will grow strongly in 2010 and 2011.



Yes, individual companies will prosper over time, but the overall economy will not benefit significantly in a macro sense, simply because the private sector (muscle) is far too small and weak within the overweight uncompetitive NI body.


To put it bluntly, the North's economy is morbidly obese, fat, unfit and carrying too much weight in the wrong places.


Reducing the relative size of the public sector (fat) in NI has been talked about for years but with little effective action. The discussion always ends up in agreement that the way to do this is to increase the size of the private sector. Yes and NO, NO, NO!



Let's get real and pursue the analogy of the economy and the body. If my body mass index is sky-high and I am morbidly fat my doctor will not tell me to first increase my muscle and everything will be OK. My doctor will tell me to lose fat first - a lot of fat - and then increase my muscle ratio by disciplined food intake and regular exercise.


NI needs to radically and ruthlessly reduce its public sector (fat), thus creating thousands of necessity entrepreneurs to start private businesses and work in existing businesses. This will be extremely painful for a time for the economy and individuals, just like crash dieting, but it will ultimately build muscle in a growing, private sector-led society.


At the moment, thousands of clever highly talented people who could be strengthening the private sector muscle are trapped in, or sheltering in, or hiding in, the fat public sector. Tip them out.


For years they have been hoovered away from productive exporting value-adding contribution by inducements of salaries, pensions, conditions and job security that private sector businesses competing in the real world cannot match.


Come on NornIron! Politicians, people, all of us. Stop kidding ourselves. Our economy doesn't have "heavy bones", it is not the fault of our glands, it is not genetic. We are too fat!


The South is wakening up and beginning to face its problems. The sooner the North wakes up too, the better. It is all about the survival of the fittest - not the fattest!