EU exit ‘too great to bear for Northern Ireland’

EU funding was worth �2.4 billion to NI from 2007-13
EU funding was worth �2.4 billion to NI from 2007-13

EU funding is worth almost a tenth of Northern Ireland’s gross domestic product, a report has said.

The cost of a British exit from the union may be too great to bear, researchers said.

The Open University review claimed the price of doing cross-border business would rise, undermining the logic of harmonising corporation tax rates north and south and putting Northern Ireland at a disadvantage.

It said: “Given its special position in regard to the Republic of Ireland and the rest of the EU, the large transactions costs of uncertainty surrounding a BREXIT may be too large to bear.”

The review said EU funding to Northern Ireland from 2007-13 was worth £2.4 billion.

It added: “It is apparent that the performance of the Northern Ireland economy has been underpinned by funding support from the EU.

“Support accounted for about 8.4 per cent of annual GDP across a range of activities, of which nearly two-thirds is accounted for by agriculture.”

It said possible significant extra costs following an exit could affect plans to cut the rate of corporation tax on business profits in line with the Republic, and added that the price of cross-border trade and economic cooperation would rise.

Other disadvantages included:

• As a site for foreign direct investment to access EU markets, Northern Ireland could lose ground on its neighbour as the Republic becomes a more favourable location for emerging economies;

• The regulations concerning transatlantic air traffic are negotiated at the EU level, that could be detrimental to growth of international connectivity with Northern Ireland;

• The ending of EU economic development funding could result in a reversal of economic decentralisation.

A range of alternative trading arrangements could be put in place if the UK was to leave the EU, including special arrangements for access to European and world markets.

The review said proponents of continued EU membership highlighted the impact on trade and investment of an exit, while opponents focused on the costs of regulation of EU membership - which is estimated at between six per cent and 25 per cent of UK GDP.

TUV leader Jim Allister, whose party is campaigning for an exit, said UK taxpayers received back barely half of £17 billion a year sent to Europe.

He said in 2013 the net cost was £8.6 billion and added the European Commission had admitted its regulation cost businesses £600 billion a year.

Patsy McGlone, SDLP Assembly member, is an advocate of continued membership. He claimed an exit would endanger many of the gains for Northern Ireland and its link to the Republic.

He said: “Borders would re-emerge and there would be a border within our country. Some 60 per cent of small and medium enterprises from the North do business with the rest of the island. That is what we face: euroscepticism at its worst.”