Brexit notwithstanding, the economic fortunes of the United Kingdom, more than those of any other European neighbour, have a profound impact in Ireland.
The trade share remains critical, especially for smaller firms, as does inbound tourism.
There is an indirect impact too, in that the fads and fashions of the British policy debate have a way of infiltrating the agenda in this country and matter even more immediately to Northern Ireland where devolved powers are limited. The policy weather is made in London.
The ascent of Andy Burnham to leadership of the Labour party will follow the resignation of Keir Starmer and the former Manchester mayor will soon be prime minister.
He has yet to announce the composition of his cabinet and has been non-specific about the likely course of policy, with one exception. Burnham intends to devolve decision-making to the regions and has announced that a branch office for 10 Downing Street will be located in Manchester and clearly intends to base himself there for much of the week, convenient but also symbolic.
More importantly he intends to empower local units of government, believing that the relative success of Manchester is a consequence of powers granted by Westminster to the city-region. Evidence supporting this conclusion is scanty.
Even if it is true, there is no simple read-across: a policy which worked in one city can reflect unique circumstances and may not readily apply in others.
Cities in the north of England are rivals and compete for the favour of central government.
Burnham has been reluctant to name his choices for key cabinet posts, the most important of which is Chancellor of the Exchequer, Minister for Finance in plain English.
If the condition of the public finances is the greatest threat to the Burnham inheritance, a close alignment between the prime minister and the Treasury will be key and what Burnham apparently intends will be a departure from the course chosen by the outgoing Chancellor Rachel Reeves.
She had indicated a new approach to the financing of local government in the form of a linkage between Treasury subventions and the co-operation of councils, specifically their willingness to zone more land for housing, a problem in the UK as elsewhere.
Local councils in Britain, as in Ireland, are unenthusiastic about local tax-raising and complain about inadequate transfers from the centre.
Local politicians are vulnerable to the nimbyism of their electorates and the British public partial to the view that, while there should of course be more housing, they would prefer if it could be located somewhere else.
The source of the dysfunction, which Reeves had acknowledged, is the reliance of councils on central government funding with no obligation to share central government’s ambition to fix the housing crisis.
She espoused an explicit link, essentially saying unless you zone more land, you will get less money: higher zoning targets for the various counties and boroughs were published and opposed in many nimby-leaning areas, including parts of London where Labour had been traditionally out-polled the Tories.
Rachel Reeves may not be reappointed Chancellor and it will be intriguing to see if her policy approach on zoning is also ditched – any retreat can be embraced in the Burnham mantra about devolving more powers to the regions. This could be significant in the Irish debate on housing and zoning, where the tendency to follow UK policy (leave zoning to the councils) is reflected in planning legislation.
Ireland’s 1963 Planning and Development Act mirrors the UK version from 1947, conferring critical planning powers on local councils. Burnham’s anti-metropolitan rhetoric finds an echo in Ireland too, in the higher targets for accommodating population growth outside Dublin and Cork.
The new British prime minister will inherit a potential public finance crisis. Sovereign debt in the UK is higher than in many comparable countries, the ongoing budget deficit is stubborn since economic growth has been sluggish.
The textbook advice to a new government, which Keir Starmer doubtless received two years ago on Labour’s return to office, is to bite the bullet, raise taxes and cut spending, blame your predecessors and use the full five-year term to recover support.
This might or might not have worked but prevarication was the option chosen and Labour is trailing in the polls anyway.
UK government borrowing costs have risen steeply and the bond market vigilantes are on the alert.
Andy Burnham has two fewer years than Starmer had and an overall majority for Labour at the next election is 6-to-1 against with the bookmakers.
The likelihood is that policy will continue to duck increases in serious taxes, like income taxes and VAT, while defending social transfers and health spending. For Northern Ireland, this means strong Treasury resistance to any increased subvention.
SHARING OPTIONS