The Economist - UK (2022-04-02)

22 Britain TheEconomistApril2nd 2022

Before  the  referendum  in  2016,  Sinn

Fein  opposed  Brexit,  despite  having  long

been  staunchly  anti­eu.  After  the  vote,  it

backed the protocol because it would boost

trade  on  the  island  of  Ireland,  says  Chris

Hazzard, one of its mps: “Trade, much like

water running through the rocks, will find

the path of least resistance.” He, like many

on  his  side  in  politics,  thinks  increased

north­south  trade  will  play  a  big  role  be­

fore  any  vote  on  unification,  by  strength­

ening cross­border connections and mak­

ing Northern Ireland more prosperous.

Old  trade  ties  are  indeed  being  broken

and  new  ones  forged.  An  official  survey

last October found that between a fifth and

two­fifths  of  businesses  sending  goods

from Great Britain to Northern Ireland are

reducing  quantities.  Lloyd  Jones  runs  a

business from Northern Ireland supplying

Amazon;  he  complains  that  English  sup­

pliers  have  been  reluctant  to  send  him

dried dogfood because of uncertainty over

paperwork.  Mr  Johnson  once  claimed  he

had an “oven­ready” deal with the eu. “For

me,”  says  Mr  Jones,  “the  chips  are  still

stuck in the freezer.”

Meanwhile, some of Ireland’s exporters

seem to be capitalising on the disruption.

Between 2016 and 2019 the share of North­

ern  Ireland’s  export  sales  going  to  Great

Britain  fell  from  60%  to  48%,  while  the

share going to the Republic rose by around

six  percentage  points.  Ireland’s  statistics

show a 31% average annual increase in the

value  of  trade  with  Northern  Ireland  be­

tween 2019 and 2021. Much of that predates

the protocol, which came into force in Jan­

uary  2021.  And  some  is  trade  in  vaccines

and plastics for covid­proofing offices. But

Fergal O’Brien of ibec, a business associa­

tion  in  the  Republic,  says  that  Brexit  is

driving  some  of  the  shift,  as  businesses

“see  reshoring  or  sourcing  from  Northern

Ireland as reduced supply­chain risk”.

Some  economic  activity  has  rerouted

through Northern Ireland, as hauliers have

shifted  their  operations  to  avoid  the  even

tougher trade border between the Republic

and  Great  Britain.  Indeed,  Northern  Ire­

land’s unique position, with privileged ac­

cess to both the eu and British markets, has

fuelled talk of Brexit opportunities. Almac,

a  pharmaceutical  company,  boasts  of  the

“Almac Advantage” for just that reason. Of­

ficial data published on February 24th sug­

gested  that  Northern  Ireland’s  economy

had recovered more quickly than most oth­

er British regions from covid­19. 

That  is  encouraging,  as  far  as  it  goes.

But if economic integration were to precip­

itate  political  union  in  Ireland,  says  Sir

Richard  Evans  of  the  University  of  Cam­

bridge,  it  would  be  a  historical  exception

rather than the rule. Despite a German cus­

toms  union  in  the  mid­1800s,  members

took opposing sides in the Austro­Prussian

war  of  1866;  the  first  world  war  happened

despiteconsiderableEuropeaneconomic

integrationintheearly1900s.Newfound­

landjoinedCanadabecauseofeconomic

distressratherthaneconomicties;simi­

larlywithScotlandsigningtheActofUn­

ion thatcreatedtheUnitedKingdomin

1707.Spainwasunifiedbydynasticmar­

riages;Italybyrevolutionandforce.

Therearereasonstobescepticalthat

NorthernIrelandwillbuckthislong­run

trend.Oneisthat,insomeways,theisland

maynotbeintegratingatall.TheNorthern

Irelandprotocolcoveredgoodsbutnotser­

vices,wheretherearenownewbarriers.

Another relatesto thehopethatamore

prosperousNorthernIrelandwouldmake

votersintheRepublicmoreeagerforunifi­

cation. But uncertainty about Northern

Ireland’seconomicandpoliticalstatusis

deterringtheinvestmentthatmightmake

thathappen.Andthebestestimatesavail­

able suggestthat allthesenew barriers

will,infact,makeNorthernIrelandpoorer.

Althougha long­standingarrangement

betweenIreland andBritainmeansciti­

zensofeithercanliveandworkfreelyin

theother,Brexitmeansthatprofessional

qualificationsarenolongerautomatically

recognised.AndsomepositionsinIreland

facestricterresidencyrules.Forexample,

JohnMartinoftheRoadHaulageAssocia­

tion,anindustrygroup,saysthesehave

meanthaulagecompaniesinNorthernIre­

landhavingtorecruitextratransportman­

agersinIrelandtomanagetheirsouthern

subsidiaries.AstudypublishedinMarch

2020 byNorthernIreland’sDepartmentfor

theEconomyestimatedthattheimpactof

a bare­bonesdealbetweenBritainandthe

eufortradeinserviceswouldbeequiva­

lenttosignificanttariffincreasesforex­

portersinNorthernIrelandtryingtoserve

theRepublic—from4%to9%foraccount­

ingservices,forexample,andfrom5%to

14%forcommercialbanking.

Both the British government’s brink­

manshipoverthetermsofthetradeborder

betweenNorthernIrelandandGreatBrit­

ain,andpoliticaloppositiontotheproto­

col,makethebusinessenvironmentmore

uncertain.Lastyearriotingbrokeoutin

partsofNorthernIreland;inJanuarya poll

putunionistsupportfortheprotocolat

just 2%. Officials carrying out border

checks havereceived death threats. The

dup has briefed loyalist paramilitary

groups,andinFebruaryloyalistanti­pro­

tocolprotestsresumedonthestreets.

IftheprotocolsurvivesuntilDecember

2024, Northern Ireland’s assembly is

scheduledtodecidethenwhethertokeep

it.Moreover,Irishunificationwouldmake

theIrishSeaborderharderstill—apoint

seeminglylostonthose whoarguethat

Northern Ireland’s privileged position,

withfavouredmarketaccesstobothGreat

Islands within islands

Britain and Ireland

Sources: OECD; ONS

*Includeseducation and health

NorthernIreland

2019,populationas%of

UnitedKingdom2.8

UnitedIreland27.7

Population

2019, m

Great Britain 64.8

Republic of Ireland 4.9

Northern Ireland .9

Deficitperperson,bynation,2019-20,£

England

Scotland

Wales

NorthernIreland

0 1,000 2,000 3,000 4,000 5,000 6,000

Other

Socialprotection Housingandcommunities Publicorder Education Health

LevelinEngland Dierencewith England: Revenue shortfall

Spendingon:

1

 20 22 24

NORTHERN

IRELAND GREAT

BRITAIN

REPUBLIC

OFIRELAND

16.4 30.3 20.9 22 24 26 2

 29.3

After-taxhousehold

income,2019,£’000

Public administration*,

201

, % of total employment