New figures indicate Windsor Framework has resulted in trade diversion and 'unravelling' of UK market - economist

A leading economist says new trade figures show that Northern Ireland’s economic integration with Great Britain is “unravelling” as a result of the Windsor Framework.
The NI Protocol and Windsor Framework deals for managing post-Brexit trade have resulted in checks on goods travelling between Great Britain and Northern Ireland.The NI Protocol and Windsor Framework deals for managing post-Brexit trade have resulted in checks on goods travelling between Great Britain and Northern Ireland.
The NI Protocol and Windsor Framework deals for managing post-Brexit trade have resulted in checks on goods travelling between Great Britain and Northern Ireland.
By David Thompson
Published 13th Dec 2023, 15:09 BST

Data from the Northern Ireland Statistics and Research Agency (NISRA) show a decrease in goods purchased from Great Britain – while purchases from the Republic of Ireland have increased.

When the Northern Ireland Protocol was introduced – it allowed the UK or EU to take action to protect their markets if the arrangements resulted in trade being diverted. Ulster University economist Esmond Birnie says the new figures are suggestive of trade diversion.

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The NISRA figures show that goods purchases from Great Britain were down by 2.4% last year, in contrast to goods bought from the Republic of Ireland which were up 4.8%.

Esmond Birnie said: "Today NISRA published their latest data - for 2022- regarding where NI sells to and where we buy from. This means we now have two years of official data to consider any impacts including any possible distortions under the Protocol which kicked in in Jan 2021.

“The Protocol applied frictions (some of which continue under the Windsor Framework) to movements of goods from GB to NI. In 2021 there was growth in NI's purchases of goods from GB but that growth rate was only about half that of purchases from RoI.

“The differences in 2022 are even more stark. Purchases of goods from GB (about £11bn) actually declined by 2.4% whereas purchases from RoI actually grew by about 5% to about £3bn.

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“Does the matter? Yes, beyond noting that some businesses are indeed prospering under the Protocol/Windsor Framework, those engaging in cross-border trade, what we are seeing here is strongly suggestive of what economists call trade diversion. Instead of buying from GB, NI customers, given the Protocol / Windsor Framework constraints, are switching to RoI/EU based ones. To the extent those are higher cost suppliers there is a hit to the economy overall.

“As a UK regional economy NI was formerly highly integrated with GB, policy choices made by the UK government together with the EU mean that degree of integration is unravelling. There will be complex economic effects and some will not be good."

Related topics:ProtocolNorthern IrelandRepublic of IrelandDataNorthern Ireland Protocol

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