EU offers instability to North, or South, or both.





Indications from the EU leaders’ summit (now not including the UK) suggest they are minded to allow a post-Brexit Northern Ireland a seamless transition back into the EU if that Northern Ireland were part of a united Ireland.

At first sight this might appear radical.

Words to that effect appear to be included in the EU’s formal guidelines for the Brexit negotiations with the UK (Financial Times, 28 April 2017, “EU signal over united Ireland stokes fears for post-Brexit UK”). What has actually transpired is a nod to future practicalities, and most of the Republics main parties rowing back on talk of Irish Unity any time soon.

The EU leaders in the end have done little more than reference a concern about Ireland; while others have not been slow to suggest (rather fantastically) that this amounts to a blue print for a United Ireland.

It is much less clear whether any such statement of intent will actually help or hinder the practical task of finding a workable approach to managing the Irish border in the much more likely post-Brexit scenario which is that the UK including Northern Ireland is out of the EU but the Republic of Ireland stays in.

Behind all this hubris there are two major economic questions not being addressed.

First, were there to be an open border (without the softest of Brexits, which would have no need for any special or imaginative solution) this would de facto detach Northern Ireland from the rest of the UK.

That would certainly provide a means of projecting a United Ireland without either the Irish government or the EU having to replace the support currently provided by the UK government to fund public spending in Northern Ireland; about £10bn annually. (Department of Finance October 2015, Net Fiscal Balance Report 2012-13 and 2013-14)

A half in half out Northern Ireland of the UK/EU, financed by the British Exchequer is unlikely to be considered favourably by the British taxpayer. More particularly, Stormont would have to enact EU Directives that may be in complete contradiction to Westminster’s economic direction of travel. Messy. Additionally, the ECJ would effectively continue to have a writ over part of the Kingdom and able to rule ‘against’ the Sovereign power of Westminster. And the rest.

The impact too on Scotland could be profound. It is impossible to imagine the Scottish Nationalists not being able to use a half in half out Northern Ireland for a new line in secession, as a practicable proven next step.

All in all the ‘special status’ route, an all but United Ireland, is a non-starter because it merely adds complexity to an already unstable polity in Northern Ireland, and opens up new arguments tending to the breakup of the UK not least in fuelling the perpetual grievance of Scottish separatists.

Secondly, and very specifically to NI, any sort of “hard” economic border between the island and Great Britain would have an adverse impact on the level of East-West economic flows between Northern Ireland and Great Britain? Northern Ireland’s trading relationship with the rest of the UK is considerably more important than that with the Republic of Ireland.

In 2015 total sales from the Northern Ireland economy were £66.7bn, of which £43.7bn were to Northern Ireland itself, £13.8bn to Great Britain, £3.4bn to the Republic of Ireland, £1.9bn to the rest of the EU and £3.8bn to the rest of the world (NISRA website 2017, Broad Economy Sales and Exports Statistics).

In other words, the Northern Ireland economy is about four times more dependent on the Great Britain market than is the Republic of Ireland.

The point being that what may well suit the Republic would be far more negative to the Northern Ireland economy than a Brexit of any ‘imaginative solution’ that might be proposed to avoid such an outcome.

The Republic has decided to stick with the EU and it is for the EU to sort out internal impact on member economies. Brexit is likely to be a negative impact on the Republic’s economy, mitigated only by the Republic gaining special status within the EU or a broadly free trade deal on UK departure from the EU. A form of ‘Special Status’ for the Republic within the EU is the only relevant ‘imaginative solution’ in this context.

The only other reason offered for special interest in Ireland by the EU is its claim to a share in the paternity of the Northern Ireland peace and political process – though rather after the fact.

The EU brought us the Common Agricultural Policy and the Euro currency: neither of which are universally loved. It is perhaps not surprising that over the years the EU has been anxious to find whatever successes they can.

Still, the EU claim to be a positive influence in the Norhern Ireland peace process may be overtaken by a willing and reckless intervention as a destabilising influence (political and economic) in that settlement. Or by a calculated decision to compensate the impact on a member State with an emotional win at the cost of the UK’s integrity and Northern Ireland’s best economic interests.


Esmond Birnie: Economist




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