With Brexit raising tensions ever higher in the British political landscape, talks of reuniting Ireland and Northern Ireland have surfaced again. In a 2016 document titled ‘Towards a United Ireland’, Irish political party Sinn Fein outlined how the reunification of Ireland and Northern Ireland might not be as costly as is popularly believed. Outlining the cost at a total of £2.7 billion instead of the traditionally believed £24.1 billion. But how accurate is this?
Firstly, we will look at any direct costs associated with Northern Ireland. Because of its relatively weak economy Northern Ireland is dependent on the British treasury to sustain it. With 28.2 percent of the population economically inactive, and a lack of foreign investments the region runs a fiscal deficit. Ireland would have to pay out of pocket to even out its spending.
Currently, Northern Ireland which is part of the United Kingdom receives £10.8 billion (€12.1 billion) in annual subvention from the UK exchequer, which equates to 25 percent of its national income. Figures published by Ulster University’s Conflict Archive on the Internet (CAIN) show how subvention rose from the period of 1966-1993. Subvention was first recorded as costing £52 million annually (£489 million in 1992 prices), rising to £3.34 billion by 1996-97 and up to its current amount of £10.8 billion in 2018. These are the direct costs associated with Northern Ireland as a region.
Secondly it is worth taking a quick look at the possible impact of a hard Brexit on Northern Ireland’s economy. Northern Ireland has a considerably closer economic relationship with the EU, and particularly Ireland, compared with any other part of the UK. While less than 50 percent of UK merchandise exports are destined for the EU, about 56 percent of Northern Ireland’s exports are to the EU, and of that more than half go to Ireland. A report led by academics at the University of British Columbia found that a hard Brexit would reduce Northern Ireland’s GDP by €10.1bn from 2021-25.
Lastly, because of the aforementioned reasons, a report by economists John Fitzgerald of Trinity College Dublin and Edgar Morgenroth of Dublin City University, suggest that the added taxes to sustain Northern Ireland in a United Ireland scenario, would result in a 15 percent drop in living standards in the Republic. The researchers point out however that what remains unsolvable is the question of what a united Ireland might be capable of economically in the long run. They point out that while it might be costly for the first 10 years, their combined economies might supersede their individual ones in 30 years. After all the kinks had been worked out. They refer to the German reunification in 1991 as a historical example of what might happen.
While there may be some truth to Sinn Fein’s claim – considering all the variables – that reunification might not be as costly for the citizens of the Republic of Ireland as normally believed, in the short term several economic studies point towards a higher initial cost than £2.7 billion. We therefore conclude that the claim is false.
Leave your comments, thoughts and suggestions in the box below. Take note: your response is moderated.
RESEARCH | ARTICLE | These fact checks were produced for the 2019 edition of euroviews.eu, IDENTECO. Travelling to three corners of the European continent; Northern Ireland, Italy and Serbia, the mission of this student magazine is to help you identify your Europe.
The reporters form part the Europe in the World class, a one year advanced journalism programme with a focus on foreign reporting that takes place at the Utrecht University of Applied Sciences and Danish School of Media and Journalism (DMJX).