Thursday 14 November 2019

Dublin accounts for 40pc of the economy's output

Dublin city centre
Dublin city centre

Colm Kelpie

The economy grew last year at more than five times the Eurozone average and far outstripped that of any other European country.

The recovery is upon us, but we've repeatedly been hearing that it's a two-speed recovery, and that many parts of rural Ireland are not yet experiencing the feel-good factor that the statistics suggest.

That comes as little surprise. Capital cities, indeed urban environments generally, feel the effects of growth faster because that's where the kick-start in activity usually begins.

But a report from Davy Stockbrokers last week highlighted how reliant the economy is on the capital.

The report pointed out that the share of Dublin in nominal gross domestic product (GDP) remained close to 40pc throughout the period between 2002 and 2011.

And when you include the Mid-East region, which contains many of the capital's commuter counties, that share rises close to 50pc. London's share of the UK economy is just 20pc, the Davy report shows.

Dublin also accounts for 30pc of aggregate employment, rising to 42pc when the Mid-East region is taken into consideration.

Davy economist Conall MacCoille, who wrote the report, pointed out that employment has been broadly similar across Dublin and the rest of Ireland despite the capital accounting for 60pc of multinational jobs.

But a gap largely opened up in just the final three months of last year. The unemployment rate, in the final quarter of last year, was estimated to have been 8.6pc in Dublin and 9.9pc nationally.

"Overall, Ireland's official labour market data does not point to striking differences in performance between Dublin and the rest of the country," the Davy report noted.

"This is surprising as foreign direct investment, particularly in the ICT sector, has been concentrated in the capital.

"Since reaching a trough in 2009, employment in IDA-supported enterprises, typically multinationals, has increased by 21pc. However, 60pc, or 17,300, of these gains have been in Dublin."

Dublin and the Mid-East are the only regions where social transfers to households were exceeded by household taxation, Davy said.

Demand for housing is, as one would expect and as we are seeing, greater in Dublin, and the capital has been more liquid. But Davy said the recovery in transactions last year was actually stronger outside Dublin.

However, the report said that the divergence between Dublin's commercial property sector and the rest of the country is "stark".

"Clearly, Ireland has been largely reliant on the Dublin region," Mr MacCoille wrote. "However, somewhat surprisingly, employment performance was broadly similar up until Q4 2014.

"However, there is a concern that bottlenecks, in both residential and commercial property, are now emerging in Dublin which could constrain growth."

Irish Independent

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