Esmond Birnie: The Irish Sea border does indeed seem to be causing diversion of trade to the Republic of Ireland

But important though the crisps are, there is a bigger picture when we use the most up-to-date official statistics to show how NI’s trading relationship with the Republic of Ireland (RoI) has grown much stronger during 2011-22 whereas that with Great Britain (GB) has declined in relative importance.

This is the subject of my recently published article (May 31) in the journal Irish Studies in International Affairs (in association with ARINS/Analysing and Researching Ireland North and South and the Royal Irish Academy). Click here to read the article.

Before considering what has happened to cross-border and cross-Irish Sea trade, it is worth summarising the pattern in NI’s overall exports and external sales (exports being NI sales beyond the UK and external sales being NI sales to GB and the rest of the world). The reason for such attention is that especially in a small region like NI trade and export growth is often considered an engine of growth. The most up-to-date NISRA (Northern Ireland Statistics and Research Agency) data, for the years 2011-22, shows outcomes were very disappointing.

The volume of goods exported in 2022 was lower than 11 years earlier. To an extent, the NI economy has been “de-globalizing”: becoming more dependent on the home, regional market. That said, service exports did sustain very rapid growth. Ironically, policy makers have often focused more on the manufacturing sector than the services – even though it was in the latter that the export-led growth actually happened.

Whilst NI’s overall performance in terms of selling goods to the rest of the world has been disappointing, NI’s trade integration with the RoI increased powerfully during 2011-22. We can see that when we look at the value of goods sold to RoI in 2011 as a percentage of the value of goods sold to GB and then compare that to the situation in 2022. RoI’s relative share climbed during 2011-22. Similarly, in terms of goods being purchased and brought into NI, RoI’s relative share jumped up during 2011-22.

Some of that growth happened before the implementation of Brexit in early 2021. That earlier growth may be attributed to factors such as: trend growth in all-island supply chains, the impact of InterTradeIreland and the closure/down sizing of some large plants in NI which had sold to the GB market (the small absolute size of the NI economy means that sometimes effects at the level of single businesses impact on the statistics for the overall NI economy).

Relatively rapid growth in sales to/purchases from RoI during 2020-22 is suggestive of the protocol causing trade diversion: Cross-border trade substituting for what was previously NI-GB trade. My journal article indicates evidence that such an outcome may reduce the economic welfare of the NI economy. Notably in terms of higher prices to consumers. RoI grocery prices have long been much higher than those in NI and part of the explanation of this could be RoI’s reliance on EU-based supply chains (and NI has been shifted towards those supply chains under the Protocol/Windsor Framework).

Given that my article was written in early May 2024 it provides the first academic economic assessment of aspects of the January 2024 Safeguarding the Union Agreement.

Importantly, that agreement contained a long list of commitments (action points) for the UK government (over 20 of such). There was always going to be some doubt about how far these action points would be delivered (a conclusion now reinforced by the ‘early’ calling of the general election).

My journal article also uses the most up to date official statistics to show that a reasonable estimate is that about £2bn worth of goods coming annually from GB to NI will be forced to use the (continuing) Red Lane (these being inputs for further processing within NI based manufacturing – the EU deems all such goods as being ‘at risk’ of entering the single market even though most such goods when further processed will be sold in either NI or GB or the world beyond the RoI/rest of EU).

Thus there is statistical proof that the Irish Sea border remains very salient.

The accumulating evidence is that NI’s continued adherence to EU rules, regulations and laws generates various economic and social anomalies.

The case for a difference approach to managing NI’s post-Brexit trading relationships through mutual enforcement by the EU and UK remains strong.​

• All this, and more, considered in a recently published academic journal article in Irish Studies in International Affairs (part of work linked to ARINS- Analysing and Researching Ireland North and South- and the Royal Irish Academy)

• Dr Esmond Birnie, Senior Economist Ulster University Business School