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Northern Ireland’s Productivity Challenge: Exploring the issues

The Productivity Institute’s eight Regional Productivity Forums have written an extensive agenda-setting analysis for each of the five English regions and the devolved nations of Wales, Scotland and Northern Ireland. This includes historic regional context, key issues and future research priorities. Alongside this is an executive summary: a high-level overview highlighting the productivity picture in their area, including a scattergraph showing the disparities within on a NUTS3 level in comparison with the UK average, the primary drivers and bottlenecks, a SWOT analysis and a look to the future. Both can be downloaded on the right of this page. These were written with the support of the Northern Ireland Productivity Forum.

Northern Ireland

Low productivity is central to Northern Ireland’s persistently poor economic performance, and key to improving the prospects for growth and prosperity of the province. The Northern Irish economy, which was once well-known for shipbuilding and the linen industry, has experienced severe structural headwinds as those industries experienced decline and have now disappeared. While the regional economy remains more concentrated in agriculture, construction and manufacturing relative to the rest of the UK, it is also seeing some new growth in specific areas of services, including the business services sector and the knowledge economy.

Still the productivity problem in Northern Ireland has been persistent, and has performed at the bottom range of productivity levels relative to other regions and devolved nations in the UK. The shortfall was present before the Great Recession of 2008/09, the troubles, and even the partition of Ireland. Given its location, Northern Ireland faces a distinct geographic challenge.

On the one hand, the province does not share a land border with the UK mainland – a matter that has become more challenging with the UK’s exit from the EU in which Northern Ireland was granted a special status being still under intra-EU trade rules. On the other hand, Northern Ireland is the only part of the UK to share a land border with an EU member state, the Republic of Ireland.

While economic integration of both territories has advanced in recent decades, the vast productivity gap between the two still suggests that Northern Ireland hasn’t fully benefited from stronger linkages with Ireland or the EU so far. Northern Ireland’s economy is challenged by important scale problems. It is the home to less than 2 million people, and accounts for just over 2% of the UK’s Gross Domestic Product (GDP).

Belfast is the only city in the province with a population more than 100,000. The business demography is dominated by many small and medium-size enterprises, many of which are in the foundational economy rather than part of regional, national or international supply chains. Problems of peripherality are no longer simply geographic, but also reflect the need for a wider improvement in connectivity, including access to digital networks and knowledge.

Authors John Turner, David Jordan


  • Productivity Studies




D. Jordan, J. Turner (2021) Northern Ireland’s Productivity Challenge: Exploring the issues. Productivity Insights Paper No. 004, The Productivity Institute.