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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  • T.E.Lawrence

    The SDLP are the only party who have shown any real concern on a UK exit from Europe I think the other NI parties assume that 650K Votes from NI are not going to make much ripples in an overhaul UK National Referendum, it’s basically boiling down to an English Decision. Will be interesting to see how UKIP do in 2016 NI Assembly Elections to gauge a feel of the way NI would vote in such a referendum. My guess would be YES 325K NO 325K

  • mickfealty

    The Alliance party is pretty pro too. The lesson of the Scottish referendum and innumerable other Irish referendums is that you cannot leave it too late or the consequences will be upon you. We know from the Welsh referendum too that in raw numbers even big electorates can come to a fine distinction at the end.

  • SDLP supporter

    Interesting post, and timely. As the OP notes the DUP are viscerally anti-EU and in the event of a referendum would campaign for a ‘No’, as would the UUP. SDLP and Alliance would be ‘Yes’, SF will have a real dilemma: this will be the real, new partition of the island if the UK leaves the EU and, despite SF’s platitudes about ‘a Europe of equals’ in the eight referendums in the Republic to date, SF have always been on the ‘No’ side. SF are like Syriza: they hate the idea of an ever closer union, and living up to commitments, but they want the money to keep coming in. As the recently-deceased Donald Keough (Coca-Cola) said about the 2008 Irish rejection of the Nice Treaty, where SF were in the vanguard of the ‘No’ campaign: “a fit of Euro-bashing pique worthy of the worst of little Englandism,” It will be weird, SF, DUP, UKIP and some of the UK Conservative Party all campaigning for Brexit and a consequential new partition of the island of Ireland.

  • Robin Keogh

    I know its an exciting debate…what if etc. But, its never going to happen, there will be no Brexit. Why? simple. In the run up to any referendum, every business in Britain will bombard the public with pleas to stay put. There is absolutely NO WAY the city of london will allow a Brexit, not in a fit !

  • T.E.Lawrence

    ‘In raw numbers even big electorates can come to a fine distinction at the end’ OK Fair Point Mick, then in that case based on NI European 2014 Election Results. Banked Pro Europe NI Parties Votes SDLP-Alliance-Ni21 : 150K Votes Remainder NI Parties Votes DUP-UUP-TUV-UKIP-Cons-SF : 500K. With the exception of the Kippers if these other parties do not gave their voters a recomendation of how to vote in a Brexit Referendum then it is by all means in the interests of the European Commisssion Office in NI and a Pro Europe Labour Party to run an agressive campaign in NI to go for that other 475K Votes.

  • Owen Smyth

    We were a manufacturing powerhouse long before the EU existed, exporting all over the world. i don’t think businesses near need the dole from Brussels to survive. If they do, they’re not good businesses.

  • Dan

    The sooner the UK is out, the better

  • mickfealty

    The challenge is to give it some political spurs with voters. As Robin notes above, SF will defer to the rich capitalists of Britain to do their absentee work for them. 😉

  • barnshee

    I am baffled by teh Notrh to South fihure I cannot find any organisations “exporting” to the ROI- What is this traffic what is being “exported”

  • Robin Keogh

    Ha ha very droll young man. I have no problem with ruch capitalists as long as they pay plenty of tax 😉

  • NMS

    Robin, I am not so sure that there will not be a poll, which once called, develops a life of its own. This is the problem with all referenda, they can morph into a vote on more general issues, rather than the specific. However, assuming that Caolfhionn Ni Dhonnabháin, in her attack on “neo liberalism” is correctly reflecting SF policy,are Sinn Féin not opposed to the EU from an idealogical perspective? Post Maastricht, the EU is unashamedly an economically liberal construct.

    In her case at least she is following in a family tradition in that her late father, Tadhg, actively opposed membership in the 1972 referendum.

  • mickfealty

    Good luck with that one. 😉 He who pays the piper, also calls the tune! Tackling the housing problem would tackle inequality quicker and more sustainably.

    You need a separate policy track to deal with the rich. Making yourself more dependent upon them is the high road to nowhere.

  • Kevin Breslin

    The manufacturing powerhouse was destroyed by the war, and the easy access to cheap raw materials was destroyed by the collapse of the Empires. Manufacturing in Britain is a dead duck, remember it was the Conservative party, the party of big business that got the UK into the EEC … now despite the EU being dominated by right wing neo-liberals it’s still not right wing or neo-liberal enough … Common Agriculture Policy, Human Rights Legislation, Environmental Protection … forget all that.

    Let food prices become as unstable as that of oil, let’s all but reverse labour laws to increase profits, let’s pretend we can fish when the fish numbers are declining all these “Eurocrats” are the ones making our dreams impossible … not globalized competition, the biological constraints of a human beings and animals and the laws of physics themselves.

    It’s completely uneconomical for Europe to compete with virgin materials coming from Australia, Africa and Asia, so why is it cost efficient in say ship building to compete with Australia when you have to buy Australian ships and Australian materials in order to make British or European ships?

    Australia has a largely underpopulated flat continent filled with Iron Ore, along with other raw minerals and fossil fuels. The UK is reliant on Europe for access to Russian Coal and Arab Oil.

    There’s never going to be any heavy industry for single nation states within Europe for a hundred years except in Russia. Manufacturing powerhouses are both multinational and multicultural … companies, research, engineers, factories, investors, raw materials, capital … these rely on networks of private enterprise.

    If the 28 nations leave the EU, we will get 28 authoritarian protectorate states who want to liberate trade in other countries but not their own. None of these nations will kowtow, so effectively the pace of trade will slow down significantly. Instead of one bureaucracy for dealing with the EU, the UK and all the other European partners will have to deal with a culture of distrust that will effectively act as a sanction on European industries

    Leaving the EU will make the UK adopt the USA model, outsource manufacturing to another continent and become a nation of shopkeepers. No British manufacturer wants the UK to leave the EU, they rely on European factories to build specific parts for their high order goods. They rely on multinational networks. Financial sector needs the supply of goods and people and without the EU it struggles.

    Only Old money interests who run sweat shops, fire-sale speculators and commodity brokers want the UK to leave the EU. Willing to burn the harvest in the first cold winter for a bit of heat, oblivious as to where the food went in summer.

    Workers with the European level of human rights protections will be a thing of the past if the EU and the spirit of the EU that extends to the EFTA countries is destroyed and compromised. It’s happening in the United States, a country with no NHS or anything like European healthcare coverage, massive levels of poverty and severe worker exploitation.

    Trade outside the EU? Well that relies on not just supply lines coming from Europe, but transport networks coming through Europe as well. The UK cannot expect Europe to pay the bill for the UK’s transport of goods. Immigration, why would France pay more to keep the Afghans out of the UK, if the UK wants to adopt a hostile attitude to the Eurozone.

    Mono-nationalist jingoism is used to delude people that flag-waving armchair dwellers with a patriotic spirit are the hardest most deserving people in the world, when really they are not even what makes these nations tick over.

  • Robin Keogh

    That doesn’t really make sense Mick. High earners pay more tax simply because they can afford to, not because there is a great conspiracy to make them poor. In fact all strata have to pay taxes at some level but a person earning 20k per year is hardly in a position to fill the nations coffers as adequately as somebody earning 70k. Of course Income tax is only part of the solution it has to remain progressive and competitive, but more importantly it has to be structured in a way that ensures the nations income gets recycled through the economy as far as possible. The housing problem alone will not tackle Inequality, because there needs to be services to run alongside the provision of housing, particularly schools and community health facilities. Investing in the community produces its own returns and has the benefit of providing better opportunities as a starting point on an equal footing. The policy of humouring insatiable shareholders is what caused the wheels to come off the cart in the first place. I would never argue against the rights of someone to prosper and accumulate wealth but I will argue against anyone who seriously believes that we can depend on the momentum of the free market to raise all boats on a hide tide and maintain them up there. It doesn’t work and the recent catastrophe has shown that to be true with Papa Francis and the OECD both pointing that out. Taxation is the only tool governments have to invest in services and to tame the the excesses of the free market.

  • Robin Keogh

    SF are Euro critical rather that Eurosceptic, there is much about the European Union to celebrate, not least the free movement of people and those human rights that come from the court. But the focus on Neo Liberalism and the Capitalist economic model has been drive by a succession of governments who are economically conservative. There is no reason that Europe’s emphasis on unfettered markets cannot be tamed if the political will is there. This will only happen if and when Europeans decide to change the complexion of their national governments.

  • Kevin Breslin

    Sinn Féin, the PUP, the Conservatives and the UUP even many of the socialists and dissident republicans are on the Euro-reformist to Eurosceptic spectrum. It’s in the nature of Europe to be largely anti-federalist because the vast majority of European people want networks rather than a new nation.

    The DUP, the TUV and UKIP seem completely Europhobic, completely Atlantean and stuck in the Imperial good old days. They are reliant on the idea of a more federalized Europe which the UK isn’t part of.

    The thing about Europe is that it’s never going to be right wing or left wing, but collective.

    I am not sure about what the DUP and TUV actually oppose about Europe, they are pro-CAP, pro-rebate … they oppose Federalism, but want the fruits of the networks … happy to take federalized Common Agriculture Funds, happy to take federalized European peace funds, happy to deal with the other 27 nations as a collective EU, rather than thinking of the domino effect of all 27 nations going out and becoming 27 new EUs to deal with.

    With the exception of the TUV who are so Hiberno-phobic they oppose a cross-border framework for saving children’s lives just because it’s in Dublin, the other parties would at least not use a BritExit as a means to marginalize the Republic of Ireland from the United Kingdom because eventually that will lead to marginalizing the island of Ireland from the island of Britain.

    Before the Common Travel Zone, UK citizens living in Northern Ireland needed a passport to get to get into Britain. That is the most austere border enforcement if it becomes a situation that the Republic of Ireland cannot be in the Common Travel Zone. Such a move may even garner English support and endanger the Union.

  • Kevin Breslin

    Europe is what the people of Europe make it, the UK elected a government who opposed the Tobin Tax which would’ve taxed the City of London. France and many other nations supported the tax. In effect Europe just did what the British people wanted. Europe can be as libertarianism or as communist as it wants so long as the people are willing to work hard enough to develop the networks … libertarianism requires less work and communism requires loads.

    It seems obvious that big business and big finance can up and leave anywhere, and yes the UK economy is some what reliant on being the financial middleman in Trans-Atlantic trade … so killing the EU won’t destroy these industries just re-route them off the European shore. With E-banking and E-commerce, the need for physical space of the financial sector and associated professional services will inevitably leave the trade even more ethereal than it is now.

    It’s the first and secondary industries that the European economy need … science research, farming, mining, fishery, forestry, recycling, waste-management, sanitation, energy, manufacturing, construction, production, trade, logistics, technology … heavily reliant on internationalist approach that the EU could provide.

  • mickfealty

    If you are relying on someone politically that you say you oppose to deliver cash for your project, you are dependent upon.

    Truly progressive politics would look to make the country’s well being much less dependent on the rich.

    You tax them and the danger is not just that they may bugger off, but that you become dependent upon those who can afford to stay.

    I put this in the same category of political idea as ‘let’s default like Argentina or Iceland’. Short term appeal, long term disaster.

  • Robin Keogh

    Democracies by their very nature depend on Political structures and organised government elected by the people. To remove a governments responsibility to the public is to remove democracy itself. Truly progressive politics would aim to ensure that all people become as self sufficient and as economically active as possible in the context of equal opportunity, which is so often deprived to so many because of the reckless profiteering of the few and the absence of responsible regulation. The notion that tax sends the rich fleeing is unsubstantiated, otherwise scando states would be deserted. Moreover, capitalist enterprise relies heavy on high standards in health and education, not to mention a prosperous middle income cohort to fuel demands for production. Essentially, in my view, the antagonism that exists between proponents capitalism and socialism miss the obvious … both the neo liberal capitalist and the social democrat are interdependent. Neither can prosper without the other. The Argentina analogy is miles off the mark. Nobody is suggesting we fleece the rich and give handouts to the poor! Ultimately sustainable taxation with reponsible distributive investment is the only way to break the boom and bust cycle…it does not have to be an extreme ‘either or’ scenario, nor does it have to be a case of ultimate gain for one side over the other. If we have to live with inequality, lets make it fair inequality.

  • NMS

    Robin, It is not simply a focus. A focus can be changed without need for treaty amendments. The economically liberal model is enshrined and requires treaty changes to amend it. This is far more complex as the UK may find out. The move to economic liberalism of almost all CD parties in Europe has ensured their almost complete hegemony over the EU for several decades. As such is not an emphasis, rather it is a requirement for solutions to be market based. Election polls in Poland show the combined centre right, right wing and far right with 88% of the vote.

    The success of the CD parties economic move to the right has been the protection of certain parts of their historical social market approach. Pensions for example still follow a social solidarity model with a high income replacement model rather than the more restrained poverty alleviation model of the UK & Ireland.

    The failure of the SD parties to adapt their model to changed economic conditions, has left them floundering. The constant steady growth of the post war period is well over and if the cake cannot be sliced three ways, labour, capital & State services, then what can they do?

    The UK has always been lukewarm on the social market side, preferring a much more aggressively liberal model, rejecting the CD view and even the British LP has never really played a central role within the EU. This is perhaps why their membership remains an open question. May I refer you to the late Hugo Young’s excellent book,
    This Blessed Plot: Britain and Europe from Churchill to Blair (1998) ISBN 0-333-57992-5.

    It is striking that the same issues have remained open for so long!

  • USA

    Don’t know why you have to be so anti SF Mick. You say
    “Sinn Fein whose abstentionist MPs will play no part in …the outcome of any contingent Brexit Referendum.” News flash Mick, it’s a referendum, the people decide, not MP’s. Not SF, not Tories, not DUP not Labour etc. Also, just because SF don’t take seats in London, does not mean they cannot outline a position on a referendum. In
    You just can’t stop yourself from getting in a dig at SF, even when discussing the highly unlikely possibility of Britain leaving the EU. Terrible shame.

  • mike

    Also not so sure that there will not be a referendum returning an exit result, perhaps an accidental referendum. Implications for all of us on this island are profound and not only on economic front. One issue ,free movement across the border and, between these islands, could well be compromised by UK exiting EU whilst Ireland chose to remain.
    Just imagine going back to the situation in the 1950s when, among other things, a customs officer at Strabane logged the serial number of the tyres on your car in case you changed them in Lifford to smuggle back.
    But there is so much more to this EU membership just now particularly with respect to addressing our interests with fragile regional stability in a rapidly globalising world with a new and evolving power structure.