United Ireland would see living standards in Republic fall by 15%

New study shows impact on South if Northern Ireland lost €11bn subvention

Prof John FitzGerald’s research suggests that  in the event of a hard Brexit, the only way the North could stay in the EU is by leaving the UK, which opens up the possibility of a united Ireland. Photograph: Aidan Crawley/EPA

Prof John FitzGerald’s research suggests that in the event of a hard Brexit, the only way the North could stay in the EU is by leaving the UK, which opens up the possibility of a united Ireland. Photograph: Aidan Crawley/EPA

 

Irish reunification would come at a high price for the Republic, reducing income and living standards by as much as 15 per cent, a new study has found.

The research, by economists John FitzGerald of Trinity College Dublin and Edgar Morgenroth of Dublin City University, suggests that in the event of a hard Brexit, the only way the North could stay in the EU is by leaving the UK, which opens up the possibility of a united Ireland.

However, this would pose a number of economic challenges, not least how the Republic would accommodate the €11 billion subvention Northern Ireland receives annually from the UK, which equates to 25 per cent of its national income.

“Taking on such a bill would reduce permanently the standard of living in this part of the island by 15 per cent,” Prof FitzGerald told the annual conference of the Dublin Economics Workshop in Co Wexford, where he presented the study’s findings.

“It’s a choice the people of Ireland might make but you need to be aware of the magnitude of the dependence of Northern Ireland on transfers,” he said.

Prof FitzGerald, a columnist with this newspaper, said the cost of reunification might be less if the North’s economy developed and became less reliant on London.

Output per head

However, he noted output per head and productivity per head in the North had deteriorated relative to the rest of the UK since the Belfast Agreement.

Despite the precarious nature of the North’s economy and the fact its gross domestic product (GDP) per head is significantly lower than that of the Republic, citizens there enjoy a higher standard of living than those in the State, the study finds.

This is because of the generous transfers from London, which pay for better public services, particularly in healthcare.

Nonetheless, Prof FitzGerald warned that the North was likely to suffer the greatest negative economic impact from Brexit, given its close economic ties with the EU and the Republic compared with any other part of the UK.

While less than 50 per cent of UK goods exports are exported to the EU, about 60 per cent of Northern Ireland’s exports are to the EU, and of that more than half go to the Republic.