Eat. Sleep. 3Rs. Repeat?

For decades, the most important basic skills taught in schools were the Three “Rs” – reading , (w)riting and ‘rithmetic. In recent decades, becoming ICT literate has been added to these functional skills of literacy and numeracy. While the texting and Xbox generation have become adept at embracing technology, more so than older generations, the same is not necessarily true for literacy and numeracy. Too many of our young people leave school without mastering these basic skills. This leaves them ill equipped for the world of work and dealing with life in general. Are we doing enough to address this? Every August (bar the one just passed) social media is awash with stories on results day. Best grades ever etc. You would be forgiven for thinking we had a world class education system. That holds true for some but it is a lousy system for a significant number of others. Northern Ireland society’s fixation with school league tables breeds a one-dimensional view of educational performance. Meanwhile, Northern Ireland continues to churn out a higher proportion of school leavers without any qualifications than any other UK region. This fact receives little airtime but we can’t sweep it under the carpet.  We have an unusually high tolerance threshold for this failure in our education system. This is surprising when you consider the cost associated with the social problems that flow from these sub-optimal education outcomes.

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Pent-up demand has been and gone?

Comment on today’s SMMT Northern Ireland New Car Sales figures for September 2020.

Northern Ireland’s new car sales recovery appears to have run out of gas at the end of the third quarter. Local showrooms witnessed a 6% y/y rise in new vehicle sales in Q3 which represented the first quarterly rise since Q2 2019.  However, this was driven by sales outperformance in July (+ 17% y/y) and August (+6.6% y/y). Dealers sold 5,010 new cars in September, 2.5% fewer than the same month a year ago.  Indeed, last month’s sales represented the weakest September since the SMMT series began. This suggests that the pent-up demand evident within the July and August figures may have been and gone. A few months of post-lockdown outperformance had been expected, but this upswing now seems to be even shorter and more subdued than originally anticipated. 

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Cliff edges rounded but hard landing beckons

Fears of a ‘cliff edge’ end to the furlough scheme were always overdone.  Rishi “whatever it takes” Sunak was always going to do more. Treasury watchers have noted that the Chancellor, who has only been in post for seven months, has a proven track record of letting his actions speak louder than his words. He is an active interventionist Chancellor who has demonstrated an ability to adapt and provide more support as and when required. Another round of support measures / fiscal stimulus was due this autumn. With the pandemic rearing its head again, the associated deterioration in the economic outlook brought measures forward by a number of weeks. Today’s Winter Economy Plan is further evidence of a Chancellor who under-promises and overdelivers. Sunak unveiled a package of measures including a wage support scheme, an extension to the VAT cut for hospitality and tourism, and measures in relation to government loan schemes.

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Will pandemic kickstart young people into becoming more politically engaged?

The Kickstart Scheme has been one of the UK government’s flagship recovery policies to assist young people who are the age-group most economically impacted by COVID-19. The scheme is designed to encourage job placements for 16-24-year-olds in England, Scotland and Wales by providing grants to employers. Like many of these policies, the small print says that it excludes Northern Ireland; however NI Economy Minster Diane Dodds has since responded with a locally focused initiative.

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New car sales recovery continues

Local showrooms enjoyed their second lockdown-free month with new car sales picking-up for the second month in a row. Dealers sold 3,618 new cars in August which marked a rise of almost 7% y/y. While last month’s figures was up on last year, they were below the August sales volumes in the previous six years. Clearly there remains an element of pent-up demand in the latest figures which follow the best July in 13 years. Back in July new car sales increased by 17% y/y. Following the lockdown from late-March to early June a few months of outperformance were expected. It will take another few months of figures to get a better handle on the true underlying picture.

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Six months on, but what can we expect next?

Six months on from the first COVID case in Northern Ireland, even the most pessimistic forecaster would not have predicted the whirlwind that has hit the economy in that period. We haven’t received the official confirmation, but there is little doubt that Northern Ireland has experienced its fastest, deepest recession on record. The government induced lockdown saw aspects of the economy – including car sales, which saw a 99.4% decline in April – grind to a halt and many other aspects severely disrupted.

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Statistical fog remains but younger generations are clearly bearing the brunt of COVID-19

The furlough fog continues to obscure the true employment / unemployment picture within Northern Ireland’s labour market statistics. Together the Job Retention Scheme (JRS) and the Self-Employment Income Support Scheme (SEISS) have provided unprecedented financial support to over 316,000 workers in Northern Ireland.  That equates to 37% of total employment. At its peak, 240,200 employees were on furlough (JRS) during the lockdown period with 76,000 self-employed benefiting from assistance. Since the economy reopened, a significant proportion of these workers (as yet unspecified) have returned to work. Another sizeable cohort will remain on furlough until the scheme expires in October. Only after the scheme has ended will we get a much clearer view of the true state of the labour market. Needless to say there will be a significant rise in unemployment and fall in employment.

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Car market revving up again with best July in 13 years

With the worst quarter on record for new car sales behind them, local dealerships finally enjoyed their first lockdown-free month in July. Following a 76% y/y decline in Q2, showrooms reported 4,398 new car sales last month. That represented a 17% increase on the corresponding month a year ago and marked the largest number of sales in five months. More importantly, it marked the best July for new car sales in 13 years according to the SMMT figures.  

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Come back in the autumn

Rishi Sunak may only have been Chancellor for five months but he is already a crisis veteran. Having already splashed out hundreds of billions of pounds worth of support – £281.5bn since 11 March 2020 – today’s package added a further £30bn. Phase 1 of the Chancellor’s response was about protection via blanket support for the economy. Significantly Phase 2 of the economic response, today’s package, is more targeted support and focussed on jobs. The third phase is rebuilding. 

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