In order for any of us too decide whether a United Ireland would be viable or not we must look at the Northern Irish economy in greater detail. The question we must ask ourselves about Northern Ireland is, what do we really know about it?, the fact is apart from flag protests and the way they say “Situation” we’re pretty clueless. Yet, in recent weeks there has been talk of a border poll and maybe a United Ireland. Therefore, it would help to know a little more about the economy of the state, which in the near future may be re-united with us.
To understand the economy of Northern Ireland it is important to know how it is structured and measured. The Northern Irish economy receives what they call a “Block Grant” from the UK government of around 10 billion each year, this equates to its national budget. Furthermore, the Northern Ireland economy is measured using Gross Value Added (GVA) and not the conventional GDP unit of measurement. GVA is essentially the same as GDP except it doesn’t take into account government taxes and subsidies on goods or products. The other states of Great Britain such as Scotland and Wales are measured this way economically too.
Some basic facts about the Northern Irish economy should allow us to see how it is performing during the recent crisis. Northern Ireland currently has an unemployment rate of about 7.9% according to the latest figures, when we put that into perspective we see that Northern Ireland has a better unemployment rate than Ireland (15.1%), France (10.1%) and the UK itself at (7.8%). That is certainly an impressive statistic. Northern Ireland has a predicted growth in GVA of 0.5% in 2013 and 2.0% in 2014, that in turn is higher than the predicted growth in GDP of Germany which is forecast at 0.5% in 2013 and 1.4% in 2014 according to the Bundesbank. Both these figures clearly illustrate that the Northern Irish economy hasn’t suffered from the recession as deeply as its southern counterparts.
Northern Irelands largely sheltered experience of the global recession is due to that fact that it receives its national budget from the UK in terms of a block grant. The problem with having a “Block Grant” is that it takes away any incentive to generate a balanced and self sufficient economy. This is why the Northern Irish economy has not felt the full brunt of austerity, it has MLA’s who don’t have to correct the wrongs of the Northern Irish economy because ultimately Britain will cover any loses that are made. In a United Ireland we cannot afford that mentality. At some point the North must accept responsibility for its own budget. Currently in Scotland most people are afraid to vote for independence because they don’t believe their politicians can run the economy properly. The same will apply to a United Ireland, if people in the Republic have no evidence that Northern Ireland MLA’s can manage their budget properly, then they will be reluctant to accept them as part of a United Ireland.
64% of the budget in Northern Ireland is spent on the public sector. That level of investment in the public service is unsustainable. Northern Ireland needs to attract Foreign Direct Investment (FDI), this will take the pressure off the public finances and allow spending on further development. A recent report by Lisney estate agents highlighted the problem with FDI in Northern Ireland, its competitiveness. Northern Ireland as a separate state is failing to attract FDI because the Republic is more competitive. One of the central issues the Lisney report outlined was to do with the take up of office space in Belfast, “Take-up of space in Dublin is over six times that of Belfast and occupiers indicate that they are opting for Dublin because of its more competitive corporation tax rate”. This highlights two things, one, the Northern Irish economy is weakened by competition from the south and two, Northern Ireland cannot set its own corporation tax rate, therefore placing it at a huge economic disadvantage to the Republic.
Ultimately each of us will decide whether a United Ireland is viable or not and some of us will vote in favour of a United Ireland regardless of economics. Over the course of history there has certainly been precedents for divided nations reuniting, our most recent European example is East and West Germany reuniting in 1990. Although this was not economically viable, they did it anyway and now have the strongest economy in Europe. If Germany defied economics to make it happen, why can’t we ?