Tag Archives: Dr Esmond Birnie
Gerry Adams twirling around the Northern Ireland public spending numbers
The former Sinn Fein leader, Mr Gerry Adams was recently arguing how Irish unity had become more an issue of “when” rather than “if”.
A critical plank of his argument was that Northern Ireland is not in fact as heavily subsidised by the UK Exchequer as many of us think: he believes the actual level of spending here is lower and as a result the gap or deficit between public monies spent and revenues raised by taxes in Northern Ireland is smaller than we are often told.
Amongst other things, if he is right, Irish unity could become more affordable. Mr Adams’s argument becomes something of a fiscal dance of the seven veils. With each sentence a few more billions come off!
Bold statements, bald facts
According to Brian Feeney: “Reality is that a century of partition has left the north much poorer than the south.” (£)
No one can deny Brian Feeney loves a sweeping statement: “Irish unity will be beneficial to all on the island” – everyone’s a winner – he says, based supposedly on a report by Paul Gosling and Pat McArt. This may be the same as the report reviewed earlier on This Union, as the claims are as strange as ever. Or it could be from A New Union: A New Society – Ireland 2050 which does credit Pat McArt and appears on Gosling’s website in June, using the earlier report for economic points.
In fact, that The economic impact of an all-island economy published earlier this year assumed unity would be accompanied by quite a major reduction in public sector jobs and spending in Northern Ireland – despite the significant impact that could be expected on the NI economy from this cut, there was no accompanying indication on how the private sector might be able to compensate as local spending power diminishes, significantly. Besides…
Blue sky thinking?
In a recent report, The Economic Impact of an All Island Economy, the journalist Paul Gosling argues the case for unity. He summarised his point of view in an article in the Belfast Telegraph; 22 February, “Unionists are facing a perfect storm of Brexit and demographic shift”.
His arguments are in some ways strange.
The UK is trading just fine, together.
This is a brief response to Ed Conway “The UK is becoming a disunited Kingdom”writing in The Times (£) on 8th December.
Mr Conway – Sky News Economics Editor – argues that the various UK regions do not constitute an “optimal currency area” and should not be sharing a single UK market and common currency.
Normally questions of single markets and currency areas would be the stuff of arcane economics – the sort of thing I’d be teaching to second and third year university students. However, it is pretty clear how commentary like Mr Conway’s could play into some current debates.
An intuitive presentation of what an optimal currency area might go something like this- because Newcastle-upon-Tyne and Newcastle-under-Lyme and Newcastle County Down do a lot of trade together it makes most sense that they share a currency: the pound sterling.
But imagine a town called Neuburg in Germany, the flow of trade between Germany and any of the UK Newcastles would be much smaller. Also, many other economic conditions would vary between the UK and Germany. Therefore, it makes sense for the UK to use the pound and Germany to use a different currency (the Euro, at the moment).
But, back to Mr Conway.
His argument that the UK-wide single market and currency area is breaking up is rather exaggerated.
He claims, for example:
“…Northern Ireland is edging closer to its immediate neighbour”
However, the most recent data show that 86% of all of the sales of the Northern Ireland economy stay within the UK – 66% to Northern Ireland itself and the rest to GB – compared to only 5% to the Republic of Ireland.
Other UK regions are also trade dependent on the rest of the UK.
The UK optimal currency area/single market still has a strong economic rationale.
Dr Esmond Birnie – Economist
That was the deal that wasn’t.
What might have been the economic impact on Northern Ireland if the Prime Minister had in fact accepted the deal which was proposed by Brussels on the morning of Monday 4 December? Here are some key points:
- In order to ensure regulations continued to be aligned between Northern Ireland and the EU notwithstanding any changes in the rest of the UK, this deal implied a substantial increase in the extent of devolution to Northern Ireland.
That begs several questions. Even if we assume devolution can be restored, would it be sensible to give Stormont extra powers when we’ve seen just how erratic the progress of devolved government has been in its almost 20 years 1999-2017?
- If regulatory harmony between Northern Ireland and the Republic of Ireland (plus the other 26 EU members) is obtained at the price of opening up a regulatory gap between Northern Ireland and Great Britain that will imply a very large economic cost.
All at sea.
Professor James Anderson in the Belfast Telegraph “Brexiteers are holding NI to ransom” provides an interesting viewpoint on what he sees as the menu of options relating to Northern Ireland and GB trade with the Republic of Ireland post-Brexit. However, his consideration appears to be only partial, and incomplete.
Distant dreaming
In considering the article by academics Christopher Kissane and David Kenny (one from London School of Economics and the other from Trinity College Dublin) in today’s Irish Times (18 August), it is worth keeping in mind the title “Imagination is needed to achieve a united Ireland”.
Based on the article it would take a great deal of imagination, perhaps verging on the fantastic, if this Opinion piece was to be considered a start point.
David McWilliams is wrong to say demographics will deliver a United Ireland
The history of the twentieth century dictatorships, whether of the extreme left or extreme right, proves that when anyone claims something is historically ‘inevitable’ we should be extremely cautious.
Where we might be, or not. Who knows?
Brexit, of course.