The news of massive job losses at Catapillar subsidiary FG Wilson in Larne marks a stunning blow to what passes for an economic strategy in the North of Ireland and a major challenge to workers. With 600 losses blamed on the European recession and further losses coming based on the transfer of manufacturing to China, FG Wilson seems set to follow Seagate into oblivion. 

The news comes alongside news that local unemployment levels are approaching 9% - evidence that bluster about a peace dividend is long gone and that austerity and recession are beginning to bite. The official policy of the DUP/Sinn Fein administration and its economic policy based on austerity is to "rebalance" the economy. This strategy, copied from the Conservative coalition in Britain, aims to savagely chop public sector jobs -the major source of employment in the region - in the expectation that private sector firms will expand into the gap. 

In reality this mechanism of privatization. Services will still be paid for by the public but provided by private firms who will cut back services, jobs and wages. 

This low wage strategy is dependent on an influx of transnational capital. The idea that local capital will expand to the extent required to provide jobs is simply laughable. 

This leaves the local administration with only one proposal. That is that corporation tax be lowered to match the 26 county rate of 12.5%. The utterly reactionary nature of this proposal is self-evident. The North receives a block grant from the British treasury. Implementing the policy would see a transfer of hundreds of millions from the poorest sectors of society to the richest. There is no immediate likelihood of it being implemented because of doubts about the effects on British taxation patterns.

Even if a 12.5% tax rate was to be applied it would be unlikely to work. Few seem to realize that the fall of the Celtic Tiger is bound up with the refusal of the state to tax the transnational companies. A similar policy in the North would involve competing with a more stable economic zone in the South, itself competing with Asia.

The failure to develop any convincing economic policy in the North is not new. In the short term it should mean a savage fight to preserve public sector jobs. In the longer term it requires an alternative socialist economic programme that cannot, by its very nature, be developed within the confines of the Northern colony.