Northern Ireland must be allowed to realise its enormous potential

Like its predecessor “the Irish backstop”, the protocol is nothing more than a ruse by eurocrats to make Brexit as tough as possible

Source  - Daily Telegraph - 28/11/21

Link

Northern Ireland accounts for 6pc of the UK’s land mass and 3pc of the population – but just 2pc of GDP. It’s a relatively poor part of this country.

Yet Northern Ireland has tremendous economic and commercial potential, if political stability can be maintained and the ongoing post-Brexit row with Brussels is brought to a close.

It was a century ago that six of the nine Ulster counties were partitioned, creating Northern Ireland and what was then called the Irish Free State.

Prime Minister Lloyd George and Colonial Secretary Winston Churchill retained Northern Ireland for all kinds of reasons, not least because the British Empire was disgusted by the idea of full capitulation to the likes of Michael Collins and other Irish nationalists, whatever the Americans said. But economics also played a key part.

Back then, Belfast was the ship-building capital of the world and manufactured goods accounted for two-thirds of Northern Ireland’s exports. The South was an agricultural backwater.

Shipbuilding has since declined, of course, and what is now the Republic of Ireland has forged ahead, building an economy boasting a far higher per capita income than its Northern neighbour.

The Republic’s GDP per head is famously skewed upwards by the relocation of numerous multinationals, attracted by low rates of corporation tax. But even allowing for that, the south is now very significantly wealthier per head than both Northern Ireland and the UK as a whole.

Having said that, spending much of last week in Northern Ireland reminded me how much commercial progress has been made, particularly since the 1998 Belfast-Good Friday Agreement.

That landmark power-sharing accord didn’t end paramilitary violence, of course. Just four months after it was signed, dissident republicans killed 29 people in Omagh - the worst single death toll of any bombing since the “Troubles” began in the late 1960s.

Yet it was still a game-changer and since 1998, Northern Ireland has attracted investment from over 1,100 global corporations, drawn by lower rents and operating costs than the rest of the UK and a relatively young and skilled workforce.

Today, North Ireland’s commerce is focused on financial services, and relatively high-tech manufacturing, as well as construction, agriculture and hospitality. Driven by the research prowess of Queen’s Belfast and Ulster University, there are thriving life and medical science sectors, as well as valuable IT niches, not least cyber-security.

Northern Ireland – like Ireland as a whole - is dominated by small and medium-sized enterprises, which between them employ more people than large companies and the state combined. That’s striking, given that Northern Ireland is easily the most “statist” part of the UK, with public spending some 21 percent higher per head than the country as a whole.

A major uncertainty overhanging the economy is, of course, the vexed question of the Northern Ireland Protocol – which, post-Brexit, leaves the province within the European Union’s single market, unlike the rest of the UK. The idea is to stop goods entering the Republic of Ireland, and therefore the EU, across the now thankfully invisible Irish land border.

Putting physical custom checks on that twisty 320-mile frontier, which follows rivers and remote field boundaries, sometimes crossing individual farms, would clearly be both impractical and politically explosive. Anything remotely resembling the military check points of the past could stoke sectarian violence.

Brexit Minister David Frost remains locked in negotiation with his EU counterpart Maros Sefcovic – hoping to secure an initial agreement under which the EU will allow the unfettered import of medicines into Northern Ireland from Great Britain. Many unionists meanwhile deeply resent the “border down the Irish sea” separating two constituent parts of the UK – and there are worrying signs paramilitary splinter groups are benefiting from such discontent.

Despite all that, having spoken with countless business leaders across Northern Ireland over recent days, I was struck how many have a relatively positive view of the protocol. Many exporters, particularly manufacturers, feel it gives Northern Ireland a “unique advantage”, allowing full access to both the EU and the UK. Some multinationals are considering moving to Belfast precisely for that reason.

The protocol is certainly altering trade patterns in a manner that alarms those who fear a “United Ireland”. Data from the Republic’s Central Statistical Office show trade flows of goods into Northern Ireland from the South up 77pc in value since Brexit, with exports the other way – from the North into the Republic - 43pc higher.

Intra-UK trade links are meanwhile being “worn away”, says Lord Frost, by protocol rules requiring complex declarations to bring goods into Northern Ireland from Great Britain. While this is no doubt true, obtaining detailed data isn’t easy, with official Northern Ireland trade statistics since 2019 yet to be published.

I wasn’t surprised to hear various Northern Ireland business leaders – from both Catholic and Protestant backgrounds - talk up the advantages of the protocol. Entrepreneurs in this part of the world are a resilient bunch, telling me they can live with current arrangements, as long as the bureaucracy is tamed.

While I’d like to agree with them, it strikes me that even a streamlined protocol isn’t a long-term solution. Over the coming months and years, regulations between the UK and EU, currently practically identical, will start to diverge. That, after all, is one of the main points of Brexit. As various grace periods end, moving goods from Northern Ireland into Great Britain will also become more complex, as has happened with trade the other way.

The bottom line is that the protocol is, like its predecessor “the Irish backstop”, nothing more than a deeply cynical ruse by the eurocrats to make Brexit as tough as possible – to discourage others from leaving – while attempting to keep the UK within the EU’s legal jurisdiction.

Countless studies – including those commissioned by Brussels – show that, by using derogations, technology and trusted-trader schemes, Ireland’s land border, already a perfectly good tax, duty and currency frontier, can provide suitable protection for the EU’s single market.

I want Northern Ireland to be prosperous – and, after last week’s visit, I’m encouraged by the calibre and energy of local business leaders. But the protocol is unstable and politically dangerous – and should ultimately be scrapped.