In this weeks blog by NERI Co-director, Paul Mac Flynn he discusses the outcomes of the seminar that he co-presented with Dr. Tom McDonnell, NERI Co-director on Wednesday and their upcoming working paper on resilient growth.
The global economy is in the midst of yet another unprecedented crisis. The fact that the energy and inflation crisis brought on by the war in Ukraine comes so soon after the Covid-19 pandemic makes it all the more painful for those who face yet another wave of disruption to their livelihoods. The economy of Northern Ireland and the Republic of Ireland are not immune from these global pressures. Northern Ireland in particular faces the additional challenges the UK has brought upon itself over the recent past. While the economic disruption from the pandemic was largely unavoidable, people would be forgiven for asking why we seem to have been in an almost constant state of economic uncertainty since the financial crisis in 2008. The reason is that we have not learnt the lessons of that crisis.
What the financial crisis should have taught us is that it's not just enough to have economic growth, we need to have growth that is sustainable and resilient. It’s not just enough to have low rates of unemployment, we need a labour market where work pays, and people can feel a sense of stability and control in their employment. We need to look beyond aggregate outcomes and understand the distributive implications of the policy decisions we make.
We need to ask more probing questions about investment at all levels in our economy. Do the public investment decisions we make now moving correspond with what we know to be key drivers of long-term growth? Beyond that we need to see the state involved in the investments that the market can’t or won’t make but which are necessary for the zero-carbon transition. Do we have a tax system and a revenue base that are resilient? Will that system be able to withstand the next crisis that we will inevitably face? Does that system have the right incentives to promote a sustainable economy?
The time to start asking these questions is now. In a forthcoming working paper we will seek to address the challenge of creating a new model of sustainable and resilient growth. We presented some initial proposals from the paper at the recent NERI seminar series and you can take a look at the slides here.