Urban-rural divide widens as capital booms
Fears of two-tier recovery as pace of growth wanes in rural areas
Published 24/04/2015 | 02:30
THE country is being gripped by a two-tier recovery, as Dublin powers ahead but rural towns and villages stagnate.
People living in Dublin are far more confident about their personal finances than those in the rest of the country, according to a new study by the Economic and Social Research Institute (ESRI) and KBC Bank.
The findings suggest the gulf between urban and rural Ireland is widening.
People living in and around the capital are optimistic about economic conditions and the outlook for jobs is brightening.
Consumers now expect stronger macro-economic conditions to translate into an improvement in household finances in the next 12 months.
The survey hints at an expected broadening of the recovery in the capital. But groups representing rural communities said economic growth was much weaker outside the capital and surrounding counties.
James Claffey, of Irish Rural Link, said: "There is a two-tier recovery going on at the moment. Rural areas are seeing a bit of a resurgence in economic activity and in consumer optimism, but just not at the same pace as Dublin."
He said official studies have shown that unemployment in rural areas shot up by 192pc during the downturn, compared with 114pc in urban areas.
Rural areas were blighted with emigration, the loss of garda stations, bank branches and post offices.
Large numbers of shops were boarded up in rural towns and Government reports found that rural broadband was inadequate, he said.
Mr Claffey referred to the Commission for the Economic Development of Rural Areas (CEDRA) which found that small and medium-sized towns have been affected to a greater extent by the economic downturn. A key recommendation of the commission was the need for support of the local economy, particularly among rural towns.
It also called for a targeted rural towns stimulus package aimed at revitalising those towns that had been most affected by the downturn.
Rural Link, which has a membership of nearly 500 rural community groups dedicated to sustainable rural development, said there needs to be a greater focus on areas outside the capital.
And economist with KBC Bank Austin Hughes, who co-wrote the new report, said the capital was surging ahead of other parts of the country.
He said that almost half of the population lives in the greater Dublin area, but has still to benefit fully from the upturn in the economy.
"The downturn was more pronounced in Dublin, but it is now making a much faster recovery. The rest of Ireland is a little bit behind."
The full report, called the Dublin Economic Monitor, was commissioned by the four local authorities in the capital. It found:
- Employment levels in services, which dominate in the capital, are almost back to peak level. Unemployment in Dublin is down to 8.9pc from a high of 13pc.
- Dublin's housing market is showing signs of stabilisation on foot of Central Bank lending restrictions. However, residential rents continue to climb.
- Office rents are up strongly, while office vacancy rates have fallen significantly.
- Dublin Airport arrivals are returning to peak levels.
- Dublin Port traffic is back at peak levels.
- The KBC/ESRI Dublin Consumer Sentiment Index is at its highest level in the 12-year history of the series. Almost 70pc of Dublin consumers expect the economic situation to improve in the next 12 months.
- Dublin companies continue to increase staffing levels with strong levels of job creation recorded in the first three months of this year.
The survey did not assess consumer sentiment and other economic indicators outside Dublin.
But Mr Hughes said stronger economic growth would spread out from the capital in turn.
"As might be expected, given Dublin's importance to the broader Irish economy, trends in consumer sentiment in Dublin follow a broadly similar trend to those in the national sentiment survey."
The Anti-Austerity Alliance said the figures amounted to propaganda for the Government.
Dublin-based Councillor Michael O'Brien said: "I see no value in the Dublin Economic Monitor other than being part of the propaganda war of the Government narrative of recovery.
"A true recovery is one that would be experienced by the majority of people who had to pay the price for the crisis and the undoing of the damage done to us by this Government and its predecessor," he said.