Esmond Birnie: Sinn Fein looks to be in denial over funding cost of ‘Irish unity’
In mid July, Sinn Fein was unable to force the Irish government to begin active preparation for a so-called ‘united Ireland’.
Sinn Fein TD Thomas Gould made some strong comments. He lambasted economists who had allegedly used “false data and made up figures” about how much unity might cost the Irish State and hence Republic of Ireland taxpayers up-front.
Gould criticised the 2024 report by Dublin economists Professors John FitzGerald (Trinity College Dublin) and Edgar Morgenroth (Dublin City University): J FitzGerald and E Morgenroth (April 4, 2024), Northern Ireland Subvention Possible Unification Effects.
If, a big if, there was ever a voting majority for unity the nature of ongoing funding for public services in Northern Ireland would depend on the outcome of negotiations between the UK and Irish governments. The financial cost to the Irish government (and the taxpayers in the 26 counties) would decrease to the extent the UK government was willing to continue to part finance what has been the fiscal transfer from the UK exchequer to Northern Ireland.
In their report, FitzGerald and Morgenroth made assumptions about the outcome of such negotiations (arguably plausible assumptions) and also assumed that public sector wages and benefit levels (currently higher south of the border) would rapidly converge with those in the Republic of Ireland. They estimated the immediate financial cost of unity would be about euros 11bn.
It was figures such as these that Gould dismissed as “made up” and as the equivalent to climate change denial. More to his taste was the result of a 2025 study by Professor John Doyle (political scientist, Dublin City University) which used much stronger assumptions about UK government “generosity” post-unity, claiming an immediate funding cost of “only” euros 2.5bn: J Doyle (2025), The Projected Public Finances of the Early Years of a United Ireland, and the Northern Ireland Subvention.
We obviously have not yet had either a majority vote for unity or the outcome of negotiations between the two governments. The future is inherently unpredictable. No one can know for sure “how much unity would cost”. That said, there are good reasons to regard the FitzGerald-Morgenroth estimates as much more in the ball park then Doyle’s.
This is partly because we know from UK official data sources that not only is the current fiscal transfer from the UK government to Northern Ireland very large but it has been characterised by a trend increase. Doubling in size in real terms over the 25 years 2000-25.
Those like Gould and Doyle who deny the significance of the funding cost of unity have failed to sufficiently engage with the long run, upwards trend in the size of the fiscal transfer in real terms. This trend exists even allowing for “crisis events” such as the 2007-9 banking crisis or Covid in 2020-21. A ratchet effect seems to apply. During the crisis it jumps up. Afterwards it declines a bit but never falls back all the way to its pre-crisis level.
Doyle has argued that the Treasury’s fiscal transfer (or ‘subvention’) into Northern Ireland is an administrative construct which bears very little relationship to what would happen following unity. He is assuming that the UK government would after unity continue to pay for the cost of any state pension liabilities accrued whilst Northern Ireland was still part of the UK.
He also argues that the new united Ireland would not assume any of Northern Ireland’s “share” of UK public debt and hence the annual debt interest payments. But in the 1921 Treaty the Irish Free State committed to pay a “fair and equitable” share of the interest on then UK public debt as well as of the costs of war pensions.
The sums of money involved are substantial. In 2024-25 Northern Ireland’s share of UK public debt interest was £1.7bn and expenditure on state pensions was £4.4bn. It is conceivable that UK negotiators might give way regarding one of these funding streams but would they really fund both post-unity especially given current financial stringencies and the fear of encouraging Scottish nationalists?
In essence it is probably not safe for Doyle to assume that to a large extent the UK government would continue to pick up the tab. Similarly, Doyle’s report assumes the speed of adjusting upwards public sector wages and benefits in NI to southern levels would be rather slow. This seems unlikely.
Doyle’s 2025 report also argues that unity per se would act as a tremendous accelerator to economic growth. He argues (in this case correctly) that many economies in central-eastern Europe have grown more rapidly than Northern Ireland. But isn’t this comparing apples and oranges? There are many reasons why NI’s long run economic performance has been deficient: low levels of technical and vocational qualifications, lack of management expertise, inadequate innovation and issues of institutions and governance.
Taking that last point about the quality of political decision making, we are in a rather ironic position. Sinn Fein in Dublin are decrying the significance of the fiscal subvention into Northern Ireland but up at Stormont the Sinn Fein finance and first ministers are cheer leaders for ever bigger subsidies from GB, in this they are supported by the other Northern Ireland parties.
Finally, what about Gould’s slur against those economists he claims are in denial. This looks like a rather defensive attempt to shut down debate. This does not bode well for good policy making north or south of the border. If anyone is in denial it looks like Gould.
An old story about the great 17th century scientist Galileo is that when the Inquisition came to order him to stop saying that the earth moved round the sun he muttered under his breath “And still it moves”. Regarding the fiscal transfer into Northern Ireland, it will still be there and still be substantial whatever happens constitutionally.
l Dr Esmond Birnie, senior economist, Ulster University Business School