So, what place a possible Brexit in Northern Ireland’s elections?

There was a time when Europe had a popular political champion in Northern Ireland. John Hume made a successful pitch for one of Northern Ireland’s three European seats in the first directly elected European Parliament, based as much on his personal commitment to developing NI PLC as to any sectarian pitch to nationalist voters.

Since then and the onset of our local political institutions, the economic role of the EU in the wellbeing of Northern Ireland has got little play from politicians who  prefer to take the money, and pay their dues to an increasingly Eurosceptic view of the European Union.

Yet, as Brendan Mulgrew notes in this morning’s Irish News, it still makes a contribution to NI’s marginal economy…

Over the 2007 – 2013 period alone the EU has invested almost £2.5 billion directly into the local economy, with a sizeable chunk of that directed at agricultural payments.

Under the last programming period, support accounted for about 8.4% of annual GDP across a range of activities of which nearly 2/3rds is accounted for by agriculture.

In a paper prepared for the NI Assembly by the Open University Business School, there may be some interesting context for the austerity agenda:

The EU has a falling share of the world’s population (7%): total GDP (25%); but, rising
social costs (50%) due to ageing and demographics.

It goes on to argue that…

…if the median forecast for the impact on UK GDP from a BREXIT is around 2% lower then we could expect trend total GDP to be 3% lower in Northern Ireland. Similarly, we would expect trend total unemployment in to increase by a proportionate amount.

The drivers for these changes would be primarily the impact of reduced cross-border trade and economic co-operation; FDI; and a loss of EU economic development funding programmes.

In the case of less FDI, the spillovers effects of higher productivity, training and skills and more importantly derived demand for domestic production, tradable and non-tradable services would decrease. [Emphasis added]

So far so political. Perhaps you think a quicker burn in public sector employment would hasten the development of a larger private sector. There are all manner of other discussions around greater freedom to deregulate in future.

Screen Shot 2015-03-31 at 14.24.52But it’s in the area of North South relations that the impacts are likely to be most directly felt in any successful future Brexit referendum and the increasing importance of the south as a market for NI output:

The relationship between trade flows and FDI is a well-established one. In the case of cross-border economic co-operation the latter is an important driver, with spillovers effects, in the form of service activities and employment. arising out of the from the growth of the key strategic sectors.

The report goes on to emphasise the importance of the cross border context:

The programme for the 2014 – 2020 is central to the Northern Ireland Economic and Innovation Strategies and the achievement of the objectives within them.

This funding stream also further integrates the Northern Ireland economy with others in the EU, that also allows a greater degree of discretion over its development, particularly in regard to underpinning cross-border economic co-operation and growth in FDI.

In the event of a BREXIT, these funding streams would no longer be available. [Emphasis added]

All of which has potential consequences which have barely made it into the public space. That may be because as Mulgrew notes..

It may well be the case that the majority of UK citizens would reject the opportunity to ‘go it alone’ and withdraw from Europe and surely remaining in the EU would get support from most NI voters. However as we saw with the Scottish referendum, such a campaign can be negative, disruptive and damaging, notwithstanding the outcome.

The current NI contingent of MPs consists of the Eurosceptic DUP and Sinn Fein whose abstentionist MPs will play no part in deciding either the composition of the next UK government, or the outcome of any contingent Brexit Referendum.

Screen Shot 2015-03-31 at 15.41.35It’s undoubtedly true that, despite NI’s peripheral status, internal UK markets remain much more important to Northern Ireland than exports to the Republic and beyond.

However as a recent paper for OECD noted the main driver for such cross border development is political. Without political commitment and capital ‘cross bordering’ quickly becomes little more than a secondary branding exercise. 

Maintaining and proactively exploiting a single trade zone within the EU offers potential to further exploit synergies with its southern hinterland, not least through FDI in sectors like telecoms; health sciences; agrifood;  and advanced engineering.

Mulgrew quotes Newry businessman Gerard O’Hare who pointed out at the weekend that…

…trade restrictions between this region and the rest of Europe would be a detrimental step, and blow to the hopes of increased investment which have been raised through the prospect of a reduced Corporation Tax.

Even if it never comes to that, in the south there are serious strategic concerns about any further drift between east and west, never mind north and south. Tom Arnold and James Kilcourse reviewing Paul Gillespie’s most recent book:

Ireland’s national interest is best served by a UK at the heart of Europe and by maintaining stable political and economic relations across the Irish Sea and with all constituent nations of the UK.

As there is likely to be extreme uncertainty on these two fronts over the coming five to 10 years the challenge for Ireland is to protect and pursue its national interest within this unstable, unpredictable environment. It is in Ireland’s strategic interest to stay as close as possible to both the UK and Europe.

The question is does anyone in Northern Ireland have sufficient politics to make Brexit an issue before it actually happens?

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