Brexit: Northern Ireland Protocol gives temporary economic boost

The Northern Ireland Protocol has given the region's economy a temporary boost, a think tank has said.

The National Institute for Economic and Social Research (NIESR) said the boost was unlikely to be sustained without more investment in the region.

It said Northern Ireland's economic output had slightly outperformed the UK average since the end of 2019.

The NI Protocol is the post-Brexit arrangement which was agreed by the UK and EU.

It keeps Northern Ireland inside the EU's single market for goods, giving Northern Ireland manufacturers better access to the EU than companies in other parts of the UK.

It also means there are checks and controls on goods entering Northern Ireland from Great Britain, leading to added cost and complexity for importing businesses.

The UK government is currently planning to override most of the deal if the EU does not agree to radical changes.

NIESR, which bases its conclusions on official data and economic modelling, used modelling to compare Northern Ireland's performance compared to a situation where there was no protocol.

It said this suggests the protocol has helped the region attain a "comparatively respectable" growth profile, doing better than Scotland and Wales.

The modelling suggests that without the protocol, Northern Ireland would have achieved lower growth than the rest of the UK temporarily, but then converged in the long run to the UK average.

NIESR said that while this painted a picture "of Northern Ireland as a beneficiary of being in the EU's single market and customs union" the region was still massively outperformed by London and the south east of England.

Post-pandemic growth in London is almost four times that of Northern Ireland.

This leads to the conclusion that "the protocol should be viewed as a temporary boost driven by the trading sector, but to convert this into long term success, policymakers have to focus on increasing productivity".

NIESR has also highlighted how Northern Ireland's job market sustained more damage during the pandemic than originally thought.

A recent revision of the official Labour Force Survey (LFS) suggested Northern Ireland's employment rate was consistently overestimated during the pandemic.

NIESR said: "Northern Ireland continues to have the worst employment profile of the UK nations and regions.

"The LFS revisions paint a much grimmer picture of Northern Ireland's employment during the Covid-19 period."

Meanwhile, the former senior civil servant who had responsibility for Brexit issues in Northern Ireland has accused the UK government of adopting a "one-sided analysis" of the Good Friday Agreement in its plans for the protocol.

The 1998 peace deal ended the worst violence of the Troubles after three decades.

The government says the protocol needs to be changed because it is undermining the "delicate balance" of the agreement.

All unionist parties oppose the protocol and the Democratic Unionist Party (DUP) is refusing to re-enter power sharing until the deal is changed to their satisfaction.

This means Northern Ireland's devolved government at Stormont cannot function.

The government's Northern Ireland Protocol legislation, which would radically change the deal, is an attempt to address unionist concerns.

But Dr Andrew McCormick said the legislation was "internally contradictory, in that it adopts a one-sided analysis of the Belfast/Good Friday Agreement while arguing that it is needed to uphold that agreement".

He said it would "set a dangerous precedent to respond to the refusal of one side to participate in the institutions by providing a concession in their favour, especially one which would run contrary to the views and interests of the majority".

Dr McCormick also said that "any application of Brexit disturbs the delicate balance established following the 1998 agreement".

He concluded that "a practical and reasonable way forward is clearly available" but that would require "courageous leaders to stand up and look beyond short-term and sectional interests".

A UK government spokesperson said its priority was protecting the Good Friday Agreement, "which is based on consent across all communities".

"The current operation of the protocol is undermining the delicate balance of that Agreement," the spokesperson said.

"Our legislation will fix the problems the protocol has caused and avoid a hard border, protect the integrity of the UK and safeguard the EU single market.

"Our preference remains for a negotiated solution, but we cannot wait to address the very serious situation in Northern Ireland."

A DUP spokesman said that Northern Ireland "operates power sharing, not majority rule".

"Not a single unionist MLA supports the Protocol and practically no-one now supports the full implementation of the Protocol except Brussels," they added.