Friday 30 September 2016

No recovery in sight for rural Ireland

As house prices rise in Dublin, Sarah Carey asks if the economy beyond the Pale is permanently disadvantaged

Published 31/05/2015 | 02:30

The report from Nama to Finance Minister Michael Noonan isn’t saying much we didn’t already know: house prices in Dublin are recovering faster than the rest of the country and nothing is going to change that for the foreseeable future (Chris Bellew)
The report from Nama to Finance Minister Michael Noonan isn’t saying much we didn’t already know: house prices in Dublin are recovering faster than the rest of the country and nothing is going to change that for the foreseeable future (Chris Bellew)

The report from Nama to Finance Minister Michael Noonan isn't saying much we didn't already know: house prices in Dublin are recovering faster than the rest of the country and nothing is going to change that for the foreseeable future. And yet, that rubber stamp on the reality of the two-tier recovery is a grim moment for anyone living outside Dublin. Was rural Ireland's death warrant just signed?

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It can be tempting to dismiss the significance of house prices as nothing more than dinner-party fodder; or indeed, to scoff at the entire concept of a "recovery" measured by property values.

Does anyone really think that achieving boom-level prices is a return to good health? I certainly don't; though anyone in negative equity might disagree. But house prices are significant because they tell us what's going on in the rest of the economy, the rest of the country, and actually, the rest of the world too.

Across the world, cities are taking off. If you think Dublin is bad - just look at what's happening in London. It's become a city for the super-rich, where the "squeezed middle" is no mere whine from the once upwardly-mobile, but the legitimate grievance of a class physically forced out of the nation's capital. From Paris to New York to Bejing, it's the industrial revolution all over again. Cities are the magnet for everything: people, business and money. Dublin isn't an anomaly. It's part of a global trend.

In Ireland, the accelerating gap is just a symptom of the wider economy. The divide extends to demography and geography. It's sectoral, social, medical and educational. Whatever about during the day, rural villages are eerily empty and quiet at night. We got used to shops closing, but then the banks shut too, forcing us to larger towns just to lodge a cheque.

But, in Dublin, the pubs and streets are heaving with young people out drinking. Last year, I tried to make reservations in Dublin city centre restaurants to meet up with friends, and couldn't believe the trouble I had. Everywhere was booked out. With things so quiet at home, I'd forgotten that restaurants in Dublin were full again.

Of course, that's all driven by employment. The high-tech ecosystem is flourishing, so that's put a fire under the youth-based rental market near the city. In professional services, it's like the financial crisis never happened. I'm told wages and bonuses in the leading accountancy, legal and finance firms are even bigger than five years ago.

For some people, the recession is over and those people are more likely to live in the capital. Even if someone can fix the housing-supply problem in Dublin, that won't change the fact that it's going to be the centre of economic activity.

Of course, it was always thus. Non-farm incomes in rural areas have always been lower than urban incomes. For most of the 20th Century the story of rural Ireland was emigration and migration.

We're well accustomed to the grievances of people, particularly west of the Shannon, that the crowd in Dublin forgot about them. But there was still a sense that you could make up the lost ground. Isn't this what drove the farming classes to get their children into college, off the land and into a safe job? The begrudgery of left-wing commentators at this mobility was always a sight to behold.

But with the gap widening, is it going to get harder to compensate for rural disadvantage?

For example, my peers in Dublin, no matter how short of money, are heavily focused on getting their children into private schools. Even if they could afford it, culchies are cut off from the Jesuit hot-houses in which the professional classes are cultivated.

When it comes to third level, will country families tell their children not to apply to the superior universities in Dublin because they can't afford the sky-rocketing rents? Just how deep will that geographic divide run? And will it become as hard and as deep as the class divide - from which there is no escape?

If so, the challenge for Government is how to manage a strong core and struggling periphery. We've watched the EU make a bags of the same problem. Will it be any easier to manage a two-tier economy at national level?

Some problems you can't fix. You can't make Google move to Leitrim and the crude effort at decentralisation of the civil service created some ridiculous anomalies. But you can do a lot with investment. The EU concept of the cohesion fund was a good idea and could be focused on public transport, health and education.

But to get there we need political leadership and our leaders, irrespective of rural origins, seem to quickly get lost in the public and private sector bubble of privilege of Dublin 2.

Urban capture befalls all those who walk the corridors of power, elected or unelected. To prevent the geographic divide hardening into a permanent social and economic breach, they might remember that 'tis far from Merrion Square some of them were reared.

Sunday Independent

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