Economist: Leo Varadkar is wrong to say Northern Ireland has benefited from the protocol

In questions following a speech before Christmas at Industrial Development Agency (IDA Ireland), Leo Varadkar wrongly claimed that the Northern Ireland economy had benefitted from the NI Protocol.

The data does not support Leo Varadkar’s conclusion about the  benefits from the NI Protocol. However, he was right about the dramatic increase in trade across the Irish land border, but apparently without realising that the UK regards this as  justification for invoking article 16
The data does not support Leo Varadkar’s conclusion about the benefits from the NI Protocol. However, he was right about the dramatic increase in trade across the Irish land border, but apparently without realising that the UK regards this as justification for invoking article 16

He said that UK official statistics “showed that the Northern Ireland economy had outperformed the rest of the UK ... and shows what a success it [the protocol] has been”.

He may have been misled by a Financial Times article stating that official data showed that GDP in NI had grown faster than the rest of the UK between the final quarter of 2019 and the third quarter of 2021.

This finding depended partly on new experimental estimates rather than on actual data, and with a high degree of uncertainty.

Dr Graham Gudgin was a fellow in economics at Cambridge University and later director of the Northern Ireland Economic Research Centre before becoming special advisor to First Minister David Trimble. He is currently honorary research associate at the Centre for Business Resesrch at the Judge Business School at Cambridge University

More importantly the FT article did not point out that NI’s good performance occurred in 2020 rather than in 2021 after the protocol came into force.

If we focus on performance in the period during which the protocol has operated, ie. during 2021, the data does not support Mr Varadkar’s conclusion.

Since the protocol came into force, the evidence from official statistics is that economic growth in NI has been one of slowest of any UK region. Much of this is in any case due the impact of Covid, and the way this this impact is measured particularly in the public sector, and it is difficult to draw any conclusion from this data about the impact of the protocol.

Mr Varadkar was also reported as saying (correctly) that there had been a dramatic increase in trade across the Irish land border, but apparently without realising that the UK government regard this as evidence of trade diversion due to the protocol and hence a justification for invoking article 16 to suspend aspects of the protocol.

Instead, he seemed pleased at further integration of what he invariably calls the all-island economy.

Since there are clearly two very different economies on the island, with remarkably little trade between them, it would be more accurate to talk about greater interaction between the two economies on the island, but accuracy does not seem to be Mr Varadkar’s strong point.

Dr Gudgin is honorary research associate at Centre for Business Resesrch at Judge Business School, Cambridge University

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