Devolution in a downturn

Divergent approaches to sustainable economic prosperity?

John Adams

ippr seminar

Queen’s University, Belfast, 22 June 2009

% change on the previous quarter% change compared with the same quarter of the previous year

2008 2009 2008 2009

Q2 Q3 Q4 Q1 Q4 Q1

UK 0.0 -0.7 -1.6 -1.9 -4.1

France -0.4 -0.2 -1.5 -1.2 -3.2

Germany -0.5 -0.5 -2.2 -3.8 -6.9

EU 15 -0.3 -0.4 -1.8 -2.5 -4.8

Scotland 0.2 -0.8 -1.7 … -2.0

Norway 0.1 -0.8 0.8 -0.4 -0.3

Finland 0.1 -0.3 -1.3 … -1.8

Iceland -1.6 2.9 -0.9 … -1.3

Ireland -0.4 1.1 -7.1 … -7.4

Denmark 0.3 -0.8 -1.9 … -3.6

Employment rates

The response to the recession

– Economic and monetary policy reserved– Fiscal policy reserved– Approach of the DAs• Boosting demand

– Bring forward capital spending, defer NNDR

• Improving services • Skills and apprenticeships• Triage, eg ProAct• Partnership approach

The response to the recession

– Common approach

– Co-operative approach

– Does the credit crunch and the recession expose the dangers of the small country model?• The affordability of recapitalisation• Inter-connected economies• Monetary policy and the exchange rate

Divergence and Difference in Industrial Policy

– Some divergence• Picking winners• ‘Competitive’ tax rates

– Much convergence• High-value, high productivity• Business support and enterprise • Innovation• Key sectors

– Outcomes

GVA per head

Employment rates