Irish Republic ‘would be hit harder than rest of EU’ in a European trade war over Northern Ireland Protocol

An EU-threatened trade war with the United Kingdom would leave the Irish Republic worse off compared to any other of the 26 European states, a leading economist has warned.

By Henry McDonaldPolitical Editor
Friday, 17th June 2022, 7:13 am
Updated Friday, 17th June 2022, 7:18 am

The Republic has most to lose in terms of lost exports to the UK if Brussels were to retaliate with a trade war against British plans to scrap parts of the Northern Ireland Protocol according to economics lecturer Dr Esmond Birnie.

Dr Birnie’s warning comes after Taoiseach Micheal Martin accepted that a full-scale trade war over the protocol would be damaging for everyone.

The University of Ulster economist pointed out that out of all the EU member states the Republic has the highest export rate to the UK and in particular for its food processing and dairy industries.

The Irish dairy industry would be particularly damaged in any UK-EU trade war, said Dr Esmond Birnie

He said: “Back in the 1950s about 95% of all exports from the Republic went into Great Britain and Northern Ireland. That reduced a lot as the Republic later joined the EEC and also tilted its economy via foreign direct investment to the United States.

“But the figure for Irish exports to the UK is still very significant. Ten per cent of all the Republic’s exports go to the UK market which means that the Irish send more of their goods into GB and NI than the big economic hitters in the EU, the Germans, French and the Italians.”

He said that while exports from other EU states to the UK fell after Brexit the Republic’s exports across the Irish Sea have actually increased.

“It’s a real quirk but the level of Irish exports to GB and NI since the start of Brexit have increased rather than decreased. It’s further evidence that the UK market is vitally important still for the Irish economy.”

The Port of larne

Dr Birnie said Irish food processing and dairy would be particularly damaged in any UK-EU trade war that imposed tariffs and what he called “trade diversions” on either side of the Irish Sea.

“Irish products like butter and other food stuffs are popular in GB and NI, and are common place on supermarket shelves all over the UK. This industry would be the most vulnerable to such an economic conflict breaking out”, adding that a trade war could still be possible as “unfortunately sometimes politics trumps economics”.

While some businesses in Northern Ireland have been enjoying the benefits of the protocol, Dr Birnie said in general the post-Brexit deal has resulted in soaring costs for many enterprises across the Province.

“The problem, and it is a question that is often ignored, is that Northern Ireland as a region of the UK relies on GB firms to supply a lot of local firms’ raw materials and component parts. The protocol has raised the cost of sending these resulting in soaring costs first to the businesses and then on to consumers here.”

Responding to European Commission vice-president Maros Sefcovic’s warning that the EU may trigger a trade war if Boris Johnson’s government use new legislation to dump parts of the protocol, Mr Martin said such an economic conflict would be very damaging all-round in relation to economies of the UK, Ireland and Europe as a whole.

“The immediate focus now should be on commencing substantive negotiations between the United Kingdom government and the European Union in respect to the operation of the protocol. And that is our focus. Obviously, if the UK government pursues a unilateralist track without any engagement well that would create challenges and real problems between the European Union and the United Kingdom. Nobody wants that.”

Meanwhile, the UK government was accused last night of raising tensions in loyalist communities over allegedly holding back on the second reading of the Northern Ireland Protocol Bill.

Senior sources yesterday told the News Letter that government patience was “running thin” with the DUP over the party’s refusal to nominate a speaker to the Stormont Parliament despite the publication on Monday of the Bill.

Loyalist activist Jamie Bryson said an attempt was being made to blackmail the DUP which was “playing with fire”.

Mr Bryson continued: “If the government is going to cut the legs from under political unionism by frustrating a successful political solution to the pernicious Union-subjugating protocol, then they are going to further radicalise a new generation of loyalists in a direction that I do not think anyone wants to see.”