The NI Protocol is leading to business investment in Northern Ireland of a kind not seen in decades, an economist said.
nrew Webb, chief economist at Grant Thornton, said the trade deal to keep Northern Ireland in a single market for goods provided the kind of boost to the economy long promised by a cut corporate tax.
The data also shows a surge in trade from Northern Ireland to the Republic, although the long-term reliability of the data has been questioned.
But the protocol has sapped the appetite of UK businesses to send goods to Northern Ireland as it introduced new controls and documents.
While no public government record is available on the investments attributable to the NI protocol, Mr. Webb said, âI would say that there is a body of evidence to suggest that the protocol works for the economy of NI.
“This comes from looking at trade flows from a Northern Ireland perspective and these recent inbound investments.”
Figures from the Central Statistical Office of the Republic showed that north-south exports reached 3.3 billion euros between January and October, an increase of 1.3 billion euros or 63% compared to at the same period in 2020.
But Paul MacFlynn, an economist at think-tank Nevin Economic Research Institute (Neri), said trade figures for the start of the year, which also showed a sharp increase in trade, had been revised downwards.
He added, âI think there are a lot of supply chain adjustments in the numbers right now, so I think they’re still too volatile to identify a long-term trend or change.
âThere has been a significant increase in trade to all of the islands, however you think of it, but its magnitude and long-term final destination is still very unclear. “
And it was too early, he said, to decide if the protocol had been a good thing for NI.
âI think the problem with the protocol has always been that the downsides are short term and the potential benefits are long term. It’s almost as if neither side has come to terms with it. I think NI can adopt the protocol in the long term, but any attempt to evaluate the protocol in the short term will always be overwhelmingly negative.
Mr Webb summed up the new business ventures in Northern Ireland as “the kind of investment I don’t think I’ve seen, certainly not at this rate, in my career so far”.
He cited 1,000 new jobs created by pharmaceutical company Craigavon ââAlmac, a new Â£ 8million distribution center to be set up by refrigerated food delivery company PRM Group in Lisburn and a new factory $ 200 million canning scheme by AMP in Newtownabbey.
âThese projects and these big numbers are in areas we just aren’t used to seeing other than Belfast-centric areas like ICT and cybersecurity. But we are now seeing another kind of inbound investment that is more regionally dispersed as it typically looks for large footprints.
âIt’s a real change, and the kind of change we were hoping for with corporate tax, but we’re seeing it through the protocol. Some of these foreign investments just wouldn’t have existed two or three years ago, and now we’re starting to see them in a pretty steady flow, so from a business and economic point of view there are more and more. more evidence to suggest the protocol works for the economy.
He said that while he did not believe that the data on north-south trade could still be fully reliable, it showed “that NI is doing reasonably well”.
But he said there was a “dance” between the economic benefits and how politically acceptable the protocol could be to unionism.
âJust because it works well for the economy, there’s no political unanimity – and if it doesn’t work politically, can we say it works at all? Or will it just crush us and cause ripples in the political situation again? “
He said other factors were also at risk of skewing the economic figures, including Covid-19, but the scale of the investment announcements had been encouraging.
âIt’s in the type of sector that is high added value, providing well-paid jobs that are regionally dispersed because it doesn’t all have to be in Belfast. It is now a question of seizing this opportunity with both hands.
And he said he didn’t think the constitutional argument over whether NI’s future lay in a united Ireland or continued as part of GB would be answered for economic reasons. “I just think people are so entrenched in their position that I see it being exceptionally difficult to convince enough people that ‘yes actually we might be better, let’s do that’. I can not see him. There is probably hesitant middle ground, but is it big enough to sway a vote in some way? “
Meanwhile, University of Ulster economist Dr Esmond Birnie, who opposes the protocol, said he stuck with a previous estimate of an annual cost to the economy of around 850 million pounds sterling per year. This figure consists of around Â£ 250million per year for additional government spending and 6% on around Â£ 10bn of goods imported from Britain each year.
And he said there was a middle ground between protocol and a hard line.
“A combination of agreements with trusted traders, a very flexible (by the EU) definition of goods at risk of moving from the NI to the single market or mutual application by the governments of the UK and the Republic of Ireland would significantly reduce the need for physical infrastructure and physical controls. At the border.”
He added: “To the extent that the growth in the value of trade is real, part of it is undoubtedly trade diversion … So the net gain for the economies of Northern Ireland or of Great Britain, or indeed for the economy of the Republic of Ireland, may not be as big as it looks.
But Irwin Armstrong, founder and director of CIGA Healthcare, who was one of the few businessmen here to publicly support Brexit, said: âI think we are really on the right track for Northern Ireland. The ability to trade in the UK and the EU is a very powerful tool for local businesses and inbound foreign direct investment. “
And he said the protocol affirms why NI should always wish to stay in the UK. âThe opportunity to make NI an economically prosperous country has been presented to us on a plateau due to the ability to do business across Europe.
âWe also have the ability to match the new southern corporate tax rate and, combined with the other benefits, then we would have a ‘game-changing’ situation to the detriment of the South. If people here can be offered good, well-paying jobs, a good education system, good healthcare and a system of government that actually works, then why would a majority ever vote for a united Ireland? . “
Consultant Michael Haverty said political trends influence how data on north-south trade is interpreted.
But he added: âFrom an agrifood perspective, there are significant leaps in CSO data, and you can certainly see why it’s easier to trade with someone down the road than it is. someone across the sea where there is a border, especially from the Republic of Ireland perspective.
As to whether there has been a permanent change in the trade, he said, âMy point of view would be that the dial has changed and I think part of that will be permanent. Whether or not it’s as high as some of the percentages we’ve seen recently, I think there has been a change that has taken place. He added: âFrom a purely commercial point of view, there is a gain to be made for Northern Ireland. “
Last game on Monday
“They couldn’t have a party in a brewery”
Michael Cairnduff says the business he runs with his wife, Lesley, a leading Oscar Pet Foods in Co Down, was “alarmingly close to being unsustainable” because of the protocol.
âIt should be a profitable business, but the costs have gone up to such an extent that the profitability is gone. It cannot continue like this, âhe said.
âMy fear is that if the UK does not continue to manufacture in provenances permitted by European standards, my business may disappear overnight.
âWe are not for profit and we cannot afford to pay ourselves for the extra work we do. Somewhere higher up, they’ve got to get a handle on it and make it work. “
But he said there were potential benefits for Northern Ireland’s barrier-free trade with Europe under the protocol.
âNorthern Ireland could be a better place if it is implemented correctly. “
Because they are derived from animal products, pet foods and treats are subject to stringent administrative requirements even before they leave for Northern Ireland and checks by Department of Agriculture officials, Environment and Rural Affairs (DAERA) upon their arrival here.
But Michael says checks and paperwork made life more and more difficult. Dog food pallets could now take two weeks to arrive, whereas they previously only took four days.
âControls are more and more expensive. This is what was signed and it is not as if the powers that be do not know them, âhe said.
While the demands were difficult for him, it was even more so for the suppliers in England.
âI can totally understand why some vendors are deciding we’re not going to do this anymore.
âOur administrative costs have increased tenfold, approximately 1000%, Oscar Pet Foods administrative costs have increased by a factor closer to 3000%.
“It’s absolutely a crisis.”
“Apply all the adjectives you want, but I know several that wouldn’t be printable and that I would apply to them.”
“They couldn’t have a brewery party anyway.”