Hard Brexit could cost island of Ireland €42.5 billion over seven years

Over the next seven years the unification of Ireland could benefit the country by €23.5 billion, while a hard Brexit could cost the island €42.5 billion, a new economic study published on Wednesday has argued.

The report, The Costs of Non-Unification: Brexit and the Unification of Ireland, contends that in the event of a hard Brexit where the United Kingdom leaves the customs union as well as the single market of the European Union that Northern Ireland would suffer a loss of €10.1 billion.

This is over a period from now until 2025, according to the 62-page report which was prepared by Canadian company KLC Consultants.

The authors of the report, Dr Kurt Hubner and Dr Renger Herman Van Nieuwkoop argued that the same hard Brexit would cost the Republic €32.4 billion up to 2018.

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The academics forecast that in a softer Brexit, where Northern Ireland would stay in the single market and the customs union but Britain stay out that the cost to Northern Ireland would be €3.8 billion and €13.8 billion to the Republic.

They further contended that unity would benefit Northern Ireland to the tune of €17.9 billion and the Republic by €5.6 billion up to 2025.

Dr Hubner holds the Jean Monnet Chair for European integration and global political economy at the Institute for European Studies at the University of British Columbia in Canada, and Dr Van Nieuwkoop is professor of economics at ETH university in Zurich and founder of Modelworks, a Swiss-based consultant firm which has advised international organisations and institutes.

The study was commissioned by the Irish-American organisation KRB (Knights of the Red Branch) Inc, which is based in the San Francisco area. Sympathetic to Sinn Féin, it is described as a non-profit organisation that promotes social welfare and conflict resolution through education.

KRB commissioned a study, Modelling Irish Unification, by the same authors three years ago which said that a united Ireland potentially could deliver a €35.6 billion boost in GDP for the island in the first eight years of unity.

Dr Hubner, who attended the launch of this latest report in the Europa Hotel in Belfast on Wednesday, explained that the study was based on the assumption that the Republic of Ireland would bear the cost of unification. Based on the subvention from Westminster to Northern Ireland that could be about €11.4 billion each year – although some academics who have argued for a united Ireland say the true figure could be around €6 billion.

While some economists have argued that the Republic would be unable to cope with such a multi-billion euro bill, Dr Hubner said that unification would provide the “dynamic” that would lead to greater productivity, higher output and increased investment where the Republic could absorb such costs.

Dr Hubner and Dr Van Nieuwkoop forecast that under a hard Brexit that the gross domestic product (GDP) loss of each person in Northern Ireland would be €5,053 up to 2025. The GDP per capita loss in the Republic over the same timeframe would be €5,891, they said.

Under a soft Brexit they forecast the GDP loss in the North would be €1,921 and in the South €2,510 up to 2025.

With unification, however, they predicted a GDP gain of €9,070 for each person in Northern Ireland up to 2025 and a GDP per capita gain in the Republic of €1,021.

Dr Hubner and Dr Van Nieuwkoop predicted Ireland would a face severe economic impact under a hard Brexit and concluded that the only positive scenario for the North and South would be the unification of Ireland.

On Brexit itself they stated, “Avoiding a hard border on the island and simultaneously leaving the single market, as well as the customs union, turns out to be a conundrum that seems difficult to solve.”

The authors added that if politicians “are willing to accept a hard Brexit for overarching political reasons then they accept willingly high negative economic costs.”