Esmond Birnie: On balance, Windsor Framework is bad for both the Northern Ireland economy and accountable government

1) Adverse impact on NI’s position as a regional and manufacturing economy within the UK

The green lane system has been much heralded, including by the prime minister. Indeed, it has been claimed by the UK government that it removes “any sense of a” customs frontier in the Irish Sea. Unfortunately, many firms will be excluded from being “Trusted Traders” and hence being part of the green lane process. For example, except for some very small businesses, most of the inflow of goods from GB to Northern Ireland relating to materials and components for further processing will be excluded. Given that sort of manufacturing is such an important part of the Northern Ireland economy the likelihood is that we are going to see a long-term burden imposed on Northern Ireland’s competitiveness.

Expect the Windsor Framework to accelerate sectoral shift in the Northern Ireland economy. Sectors (eg electrical engineering) which rely on inputs from Great Britain are likely to decline but those (eg food processing) which trade mainly with the Republic of Ireland/EU will expand. We have already seen evidence of this happening during 2021 and 2022.

You might be tempted to say “every economic change has its winners and losers” and some politicians may think that. The problem here is that it is possible that the sectors which the framework encourages are those with relatively low levels of wages and productivity. Conversely, we are encouraging the Northern Ireland economy to shift out of some higher productivity activities.

There is some evidence that this was already happening during the period of the protocol. If such changes continue they may produce a shift from relatively high productivity sectors to relatively low productivity ones. The economy will be shifted backwards.

2) Policy makers will find the application of EU law ties their hands

The EU has been crystal clear. EU law and the European Court of Justice remain supreme. My concern here is about the extent to which this closes down certain policy options for Northern Ireland. We have already seen that EU jurisdiction means that Northern Ireland is excluded from the benefit of having duty free on flights to the EU. It is probably no accident that freeports have been developing across GB but not here in Northern Ireland. Ironically, freeports are very much a personal policy hobby horse of the prime minister.

I also wonder how far the chancellor’s recent announcement about investment zones will really be practical here in Northern Ireland. Certainly, we will be reliant on EU goodwill and permission to fashion any meaningful incentive package. EU laws and regulations may well restrict our ability to apply any further tax devolution in Northern Ireland or for Northern Ireland to participate in any UK Free Trade Agreements.

Many have called for the Stormont executive to be restored but we must recognise the extent to which the framework reduces its freedom of movement. What is being offered in the framework is not quite “the road to serfdom” but policymakers (and hence the public) in Belfast will be denied options which their counterparts in Cardiff and Edinburgh have. To adapt a very old phrase, life under the Windsor Framework represents “taxation without representation”.

I find it very sad that so many politicians in GB and the USA have forgotten a critical part of their own political heritage - the principle of “no taxation without representation” was good enough for John Hampden and John Adams in the 17th and 18th centuries and it should be good enough for Northern Ireland in 2023!

I am someone who cares deeply about two things: making the Northern Ireland economy more competitive so we can have prosperity for all, and making our regional government more accountable. The framework does real damage to both of these laudable objectives.

• Dr Esmond Birnie is senior economist, Ulster University Business School. A longer version of these arguments is presented in Dr Birnie’s blog published this week by the academic economics’ website Economics Observatory: What are the economic implications of the Windsor Framework.

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