Following the recent restoration of Stormont, the new NI Executive delivered another important milestone last week with the publication of a Budget, amounting to £14.5billion of day-to-day spending and capital spending of £2.1bn. This is no mean feature given the challenges associated with a power-sharing arrangement and the very challenging financial environment in which the new Executive is operating. The Finance Minister also said that agreeing the Budget is the first step to putting the Executive’s finances on a sustainable footing. So in that respect, it is a welcome development. However, the reality is that there isn’t much within the Budget itself to welcome.
It would be hard to argue that the economy is currently the number one priority of the Northern Ireland Executive or for that matter the UK government or many administrations around the world. That’s because governments are having to contend with a myriad of other problems and challenges from geopolitics and disruption related to elections, to aging populations and crises in health and housing. Geopolitics in particular continues to dominate with tensions in the Middle East and the conflict in Ukraine, which is currently getting the same media attention but isn’t going away.
Slight fall in Ulster Fry Index but still second highest on record
Richard Ramsey, Chief Economist at Ulster Bank has presented his annual Ulster Bank Ulster Fry Index at an event hosted by Ulster Bank today, ahead of its principal sponsorship of this year’s Balmoral Show which returns to Balmoral Park in around 4 weeks’ time. The Ulster Fry Index indicates that the average price of all ingredients making up the traditional cooked breakfast plate decreased slightly in the 12 months to the end of February, following last year’s record rise.
Tea saw the biggest price increase in the index with a rise of 6% throughout the previous 12 months, however this was slightly offset for brew lovers with a 7.1% fall in milk prices. Rises were also recorded in pork sausages (2.5%) eggs (3.2%) and sliced loaf (1.4%)
Other items which have come down slightly in price since last year’s Index was released include bacon (-2.8%) butter (-7.6%) and coffee (-1%).
Overall, the Ulster Fry Index sits at just 0.9% lower than the 2023 figure which saw the highest increase recorded since Ulster Bank began tracking the index in 2007. The previous highest rise came in 2009, just after another recession and cost of living crisis.
The price change in the various breakfast items in the Ulster Bank Ulster Fry Index in the past year are contained within the accompanying infographic.
Richard Ramsey says that while food inflation has eased slightly, it is still causing a real concern for households.
“We know that food makes up a significant proportion of household spending and is also one of our most important economic drivers in terms of the local food and drink industry. So, understanding how the price of these popular food items change offers a useful insight into the state of typical household finances and also the overall health of the agri-food industry.
“What the Ulster Fry Index is telling us is that while the price of everyday household essentials such as butter and milk have fallen, they are still a long way off their previous positions, and this is continuing to put a squeeze on consumer spending powers.
“While it may appear to be good news initially, the reality is that many of these price decreases are too small and insignificant to fully register at the checkout and it’s clear that many households are still struggling to contend with ongoing cost pressures on what would be considered as basic, everyday household items.
This year, we will see upwards of 40 general elections globally. The big ones are the US Presidential Election, a UK General Election, and an election in India to name but a few. Invariably, candidates will try to position themselves as the candidate of change – even if they are the incumbent. This is the case with Rishi Sunak which is no easy task after 14 years of Conservative government. The reality though is that with the state of the UK public finances, there is going to be little room for change no matter who wins the election. Getting out of the current funk of low growth, economic stagnation and unprecedented pressure on public services will dominate the political agenda for the next decade.
If the number of accidents on our roads is falling, the cost of insurance should be coming down as well, right? As ever in economics, it’s a little bit more complicated than that. What we’re actually seeing is the cost of car insurance spiralling at a time when RTAs are at an all-time low. The reasons behind this are numerous including the pandemic, the higher cost of replacing cars and the fact that the kinds of cars we now buy are more complex and harder to fix.
Just over a decade ago, we were in the midst of ‘Tory austerity’, with deep cuts to public spending impacting many people’s lives. But this was accepted, perhaps somewhat surprisingly, with little protest. Workers in the public and private sectors barely batted an eyelid at pay freezes because inflation was so low and they were just grateful to have a job as the unemployment rate rose to around eight percent. The only protests outside Belfast City Hall were from one part of the community and were linked to national flags. But fast forward to today and the recent protests on Donegall Square North were about what we like to call bread-and-butter issues rather than identify politics. What has changed is that despite unemployment recently hitting record lows and employment and job opportunities never being higher, morale amongst the workforce (predominantly public sector) has barely been lower. Malaise amongst everyone across the community from teachers and nurses to road gritters, as well as in the private sector, is rife, and public services appear to be unravelling by the day. The fact that we have no functioning NI Executive makes a bad situation worse.
During the cost-of-living crisis energy prices were a major pinch point. The outbreak of war in Ukraine in February 2022 triggered a surge in global energy and commodity costs. Motorists may recall the average cost of UK petrol and diesel prices was briefly in the 180s / 190s (pence per litre) in the summer of 2022. Apart from a period of increases between July and October last year which included the steepest monthly rise (in August) for UK drivers in 21 years, forecourt prices have largely followed a downward trajectory. Indeed, average UK petrol prices fell in each of the last 12 weeks of 2023. As we start 2024 petrol and diesel prices are down over 50 pence per litre, or more than a quarter, below their 2022 highs. Filling up a car with fuel is back below pre-Ukraine invasion levels (Feb-22) with the price of a litre of petrol / diesel currently in the 130s /140s.
A century ago, the Roaring Twenties, as they became known, were about to get into full swing. 1924 represented the year in which the economy began to flourish, when the pick-up and recovery from the devastation of the First World War really began. A bit of a cultural revolution also took hold, and we saw new technology such as cars, films, electrical appliances and radio impact positively on people’s lives. Wall Street began to boom through much of the rest of the decade due to an outbreak of optimism.
Half-term breaks used to be the time of the year when offices were at their quietest as parents took leave to spend time with their children when they were off school. These days, though, there is perhaps little difference, as many offices are quiet throughout the year due to working from home. Whilst this has clear benefits for many, some parents would view working from home during the Halloween break as something of a horror story, with no prospect of peace and quiet to be productive.
If we went back in time to the 1970s or 80s, Northern Ireland was throwing money to attract single investors like DeLorean to help address chronic unemployment. Even getting them interested in speculative visits was a difficult ask and for many, no amount of sweeteners made investing in NI an attractive proposition.
