{"id":4028,"date":"2019-10-14T11:48:56","date_gmt":"2019-10-14T10:48:56","guid":{"rendered":"http:\/\/blogs.sussex.ac.uk\/uktpo\/?p=4028"},"modified":"2019-10-17T11:59:48","modified_gmt":"2019-10-17T10:59:48","slug":"economic-realities-of-brexit-for-firms-and-people-in-northern-ireland","status":"publish","type":"post","link":"https:\/\/blogs.sussex.ac.uk\/uktpo\/2019\/10\/14\/economic-realities-of-brexit-for-firms-and-people-in-northern-ireland\/","title":{"rendered":"Economic realities of Brexit for firms and people in Northern Ireland"},"content":{"rendered":"Share this article: <\/em> \"Facebook\"<\/a>\"twitter\"<\/a>\"reddit\"<\/a>\"pinterest\"<\/a>\"linkedin\"<\/a>\"mail\"<\/a>

\"\"14 October 2019<\/i><\/em><\/p>\n

Michael Gasiorek is Professor of Economics at the University of Sussex and a <\/i>Fellow of the UK Trade Policy Observatory.<\/i><\/em> <\/strong><\/p>\n

With the current state of negotiations between the UK and the EU it is easy to see why attention is focussed on the politics of a possible agreement. The contentious issue is, of course, that of the Irish border. However, the focus on the politics means that there has been little discussion of the economic impacts and specifically of the vulnerability of the Northern Irish economy to the decisions being made.<\/p>\n

Now, even prior to the 2016 referendum Boris Johnson made it clear that, from his perspective, the decision to leave the EU was all to do with politics, and he was repeatedly dismissive that there would be negative economic consequences. He argued that:<\/p>\n

\u201cthe economic advantages for Britain <\/em>[of being in the EU] are either overstated or non-existent\u201d <\/em>and that \u201cwe will trade as much as ever before, if not more\u201d.<\/em> [1]<\/a><\/p><\/blockquote>\n

The logical corollary of this argument is that leaving the EU, by leaving the Customs Union and the Single Market, would have a negligible impact. I have just been to the island of Ireland and it is quite clear that businesses and stakeholders do not remotely buy into this story.<\/p>\n

What many commentators have been saying for a long time is that there are only two solutions to the problem of maintaining no border and no customs checks between Northern Ireland and the Republic of Ireland. Either the UK remains in the Customs Union and Single Market; or Northern Ireland  only remains in the Customs Union and the Single Market. Worryingly it is still not clear how well this has been understood by those negotiating supposedly on behalf of the UK, who seemed to think a workable solution could be found with just Northern Ireland in the Single Market, but out of the Customs Union together with Great Britain. The latest \u2018landing-zone\u2019 for an agreement appears to be based on a fudge with Northern Ireland being both in a customs union with GB, but also in the EU Customs Union.<\/p>\n

Worryingly too is the lack of discussion about the economic consequences for Northern Ireland of what is being discussed. ALL<\/strong> of the above outcomes will directly increase the costs of trade for firms in Northern Ireland \u2013 either with Ireland or with Great Britain or with both.[2]<\/a> And if the negotiations fail, the costs of exporting to Ireland will rise even more, while at the same time Northern Irish firms will be exposed to considerably more competition from imports arising from the UK governments\u2019 \u2018no-deal\u2019 tariffs.<\/p>\n

The economic reasons (see box below for some key relevant statistics) underlying these substantial concerns derive from several factors:<\/p>\n