Republic of Ireland outperforms Northern Ireland in some areas - but economy now 'very vulnerable'

The research to which he was responding was published by Dublin’s Economic and Social Research Institute (ESRI), comissioned by the Irish state.

It compares some key data in both jurisdictions on things like income, tax, and joblessness.

Among the things contained in the report is the observation that the Republic's population is growing faster than Northern Ireland's, largely due to immigration, resulting in a younger population with a lower old-age dependency rate.

It also says that labour market participation in Ireland has increased significantly since 2010, widening the gap with Northern Ireland.

In 2022, the participation rate of those aged 16 to 64 was 76.8% in the Republic compared with 72.4% north of the border.

Employment rates in the Republic overtook Northern Ireland in the period after the financial crisis, reflecting Ireland's strong recovery.

Turning to living standards and income, the report found widening gaps in all commonly used measures of living standards – and these gaps favour the Republic.

Household disposable income in Ireland is 18.3% higher than in Northern Ireland and the gap has widened over time.

In terms of wages, the data show a positive gap favouring Ireland, with hourly earnings 36% higher than in Northern Ireland in 2022.

But it also found that, on a per capita basis, Northern Ireland residents pay significantly lower personal income tax than those in Ireland, which is €2,980 in Northern Ireland compared with €6,725 per capita in Ireland.

Dr Birnie said the question of whether gaps are indeed widening, and by how much, largely “depends on the time period chosen and interpretation of the chosen statistics”.

He added: “Moreover, very importantly, as has been reinforced in the last few months and even the last two weeks, many of the old certainties of the world economy have been dissolving before our eyes.

“By implication, there are aspects of the RoI’s economic development model which are now very vulnerable so there is no guarantee that any recent economic growth superiority relative to NI will necessarily continue.

“For example, notably the RoI has used a very low corporation tax rate to entice into the country many US-owned firms.

“The RoI has a huge per-person trade surplus with the US, particularly in pharma.

“Given that President Trump is well aware of this situation how long that will remain tariff free is anyone’s guess.

“NI, in contrast, has had much more success in terms of attracting in the US service sector (tariffs apply to goods) rather than manufacturing companies. NI is therefore less vulnerable to a US tariff and trade war.

“And at the moment it looks like NI will be subject to the 10% tariffs on UK goods rather than the projected 20% one for EU goods.”

He added that “it may well be worth mentioning two other issues: provision for national defence and environmental policies”.

Dr Birnie said: “Since the 1990s the UK has greatly reduced its carbon output, but carbon output in the RoI continued to grow rapidly.

“As part of the UK, NI derives whatever benefits follow from being part of a country to spend more than 2% of GDP on providing for national defence. RoI defence spending is about 0.3%.”