First detailed economic study of EU’s NI Protocol argues it’s harming GDP and jobs

Observations

It would be good to know the real figures rather than have modelled estimates but the most recent complete set of official figures available are for two years ago when Theresa May was still Prime Minister.

The only established economic fact around the Northern Ireland Protocol is that there are no economic facts to inform the debate. Despite deafening political noises, and claim and counter-claim, all actors are flying blind – relying on readings taken in the Republic of Ireland. By definition these cannot capture the necessary data to confirm the Protocol’s impact on where it is actually being applied – Northern Ireland.

The Fraser of Allander Institute report – which chiefly considers the impact of the Protocol’s non-tariff barriers – goes some way to informing the debate about what is happening on the ground. It blows out of the water the notion Northern Ireland is enjoying the “best of both worlds”.

While it suggests the best outcome would have been to have had no Brexit at all (not surprising, given the Institute’s past modelling) it cannot be ignored by advocates of the Protocol or defenders of the EU’s position that the findings of an economic institute that has repeatedly favoured remaining in the EU backs up the positions of the UK Government, opponents of the Protocol and Brexiteers still waiting on a real Brexit.

Given the mainland of Great Britain is Northern Ireland’s largest ‘export’ market it is beyond doubt that creating friction for trade within the UK must harm the economic performance of the province, notwithstanding the damage that it also inflicts to the tenets of the Belfast Agreement and other constitutional arrangements.

The lack of hard data is a failure of the Northern Ireland Office and must be rectified as a matter of urgency. Thus far the economic debate has, ironically, relied upon interim data being supplied by the Republic of Ireland – with the most recent Northern Ireland Statistics and Research Agency (NISRA) figures being from 2018/19 before the Protocol was introduced on 1st January 2020. By comparison Republic of Ireland statistics for imports and exports of goods are as recent as September 2021

Yet through this statistical fog there can be no doubt that economic damage is being done. We can see the lorries being turned away at Larne and Belfast – refused entry within their own country – because their paperwork does not meet the requirements of the EU’s customs rules. We also know from corporates such as M&S how this leads to food being dumped if it cannot reach a mainland market in enough time to be sold. And we know some product lines readily available across the rest of Great Britain are being deleted from sale by British supermarkets to try and overcome the obstacles and avoid profit-eating costs.

All of these outcomes happen under the temporary ‘grace period’ arrangements before the full impact of EU regulations are applied. It can only get far worse when the relaxations are no longer extended and the Protocol’s real impact is felt.

Establishing the true patterns of trade must be given the utmost priority, not just for justifying the unpicking of the disastrous Protocol but also for demonstrating the inseparability of the province from the rest of the UK. What has been especially missing is the data reflecting the impact upon the large majority of small and medium-sized NI businesses whose commerce is orientated towards GB and not the Republic.

The Fraser of Allander modelling gives us some insight as to how this might play out theoretically, albeit without factoring in the wider opportunities Brexit provides.

Lord Frost must take note: while the defence of Northern Ireland’s place in the UK is about much more than trade patterns, relying on NISRA economic statistics that are more than two years old is simply not acceptable in the digital age. Lord Frost’s colleagues in the Northern Ireland Office must close-up this information gap, not just to be able to defeat the Protocol but to defend the Union itself.

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