Politics

Sinn Féin disputes findings of report suggesting united Ireland to cost €20bn annually

Donegal TD Pádraig Mac Lochlainn insists actual cost is less than headline figure in IIEA study

Donegal TD Pádraig Mac Lochlainn. Photograph: Dara Mac Dónaill/The Irish Times

Vivienne Clarke
Seanín Graham
Thu Apr 4 2024 - 16:09

Sinn Féin has disputed the methodology of a report by the Institute of International and European Affairs which said that a united Ireland would cost €20 billion every year for 20 years.

The report is authored by the Economic and Social Research Institute’s John FitzGerald of Trinity College Dublin, and Dublin City University academic Prof Edgar Morgenroth.

Excluding the impact of Covid on public spending everywhere, the two academics put the cost of the UK treasury’s contribution to the running of Northern Ireland at £10.5 billion (€12.3 billion) annually, the figure given in 2019.

Basic unification costs after losing the London subvention and adjusting for other factors would run to nearly €11 billion a year. However, the cost would jump to €20.5 billion if social welfare, pensions and public service pay rates to people in Northern Ireland were brought into line with those currently in force in the Republic.

READ MORE

Funding this would require an increase in taxation of around 25 per cent and a significant reduction in expenditure, the report says.

[ Price of united Ireland: Bringing North’s welfare up to scratch presents cost challenge ]

Sinn Féin party whip Pádraig Mac Lochlainn told RTÉ radio’s Today with Claire Byrne show that the analysis was static and accepted the amount of subvention from the British government at face value.

“Prof John Doyle of DCU in recent times, has written that the actual subvention is much less. It’s about €2.4 billion. That’s about a quarter of what the British government, when you deduct their pensions, debt repayments, contribution to the defence forces of Britain and so on.

“And so it’s much less than the headline figure,” the Donegal TD said.

“But also the report assumes there’ll be no economic growth in the North. We know that since Brexit there’s been substantial growth in the all Ireland economy. We know that there is a real opportunity, and that’s thanks to the efforts of all of the political parties and people on the island of Ireland,” he said.

“We ensured there was no hard border on the island of Ireland. That means the people of the north of Ireland have access to the British economy and to the European economy uniquely so, there’s a real opportunity for economic growth.”

Mr MacLochlainn pointed to reports from Prof Kurt Huebner, who worked on German reunification and looked at the model that they used and how that would apply to Ireland. “He forecast €35 billion of growth over eight years. You have people like David McWilliams who’ve talked about how we could manage this.”

[  United Ireland: ‘It can’t be, Which side is going to win?’ ]

Minister of Finance for Northern Ireland Caoimhe Archibald also disputed the report’s findings.

“Economic performance in the north has suffered enormously as a result of partition and more recently the negative impact of Brexit. Reunification would best serve Ireland’s economic interests and would deliver economic and social benefits for the whole island,” the Sinn Féin MLA said in a statement. “Professor Kurt Huebner, for example, reported that Irish unity could boost the all-island economy by €35 billion over eight years. The key now is planning and preparation.”

Mr MacLochlainn called for a Citizens’ Assembly and a White Paper from the Government on the issue of reunification. “Nobody assumes that in the context of Irish reunification, where people on both sides of the border have voted for a united Ireland, that the British Government just walks away from the pitch.”

He said there was a process through the Belfast Agreement though which Britain would continue to have a responsibility to unionists.

“I am very open to that as an Irish republican, that the unionist population on the island would continue to have some type of relationship with Britain,” he said. “You have to assume that Britain will have and indeed would step up to take financial responsibility, moving forward. So I think this report is the worst-case scenario.”

Speaking on the same broadcast, Mr Morgenroth responded to this saying: “It’s not actually a worst-case scenario because there are a whole range of costs that you would have to face with a united Ireland that are not included.

He said some might seem like “trivial things” like changing road signage saying: “that’s going to cost money that we did not count.”

Mr Morgenroth said: “There are much bigger costs that we haven’t counted either. ”

He also responded to criticism of the findings from economist Seamus McGuinness who pointed out on social media platform X that the subvention from the UK only exists because of Northern Ireland’s low productivity.

Mr Morgenroth said: “absolutely productivity could rise in Northern Ireland but ... the evidence is that regions that lag in productivity tend not to actually catch-up with the richer regions.”

Meanwhile, Aontú leader Peadar Tóibín also disputed the report’s finding saying it “has a number of big problems”.

He said the study “takes as a given that the North of Ireland would exit with a portion of British national debt.

“The burdening of Ireland with British debt is not a given.”

Mr Tóibín also said none of the estimates include savings from reducing public sector duplication”

Pensions have been paid for by people’s national security contributions in the North,” he said, adding that the British government “would owe pensions to people who have paid contributions until unity”.

Mr Tóibín said: “Incredibly the report leaves out the elephant in the room, that in a united Ireland, the north’s economy would be turbo-boosted.

“It would be working off a significantly lower cost base, would reap the benefits of a lower corporation tax base, better productivity and better integration in the Irish and EU markets.”

Mr Tóibín, who is running in the European elections as a candidate for the Midlands Northwest constituency, said: “Given the growing support for Irish unity, its time that the Government undertook comprehensive modelling of the likely economic outcomes of a united Ireland.”

Leader of the Opposition at Stormont and SDLP MLA, Matthew O’Toole, said there appeared to be an emphasis on a “deadweight cost” in the report’s calculation on subvention – and very little focus on the economic benefits of Irish unity.

O’Toole, a former Whitehall civil servant who co-ordinated Downing St communications and policy prior to the 2016 Brexit Referendum, acknowledged that the authors “ask serious questions that still need to be answered”.

“But that doesn’t mean I agree or that you should simply accept this analysis as fact,” he said.

“My impression is that they appear to be very sceptical in that they don’t really attribute much to synergy in the North-South economy or public services; there does appear to be a particular emphasis on cost.

“Most reasonable academics have said there will clearly be synergy around public service delivery; that’s not to say, there won’t be costs because there will be costs.

“I think it would be trivial to pretend that this report does not require serious consideration. But there are many other plausible economic analyses which do not simply assume a deadweight cost on this scale.

“It’s one thing to be frank about costs, it’s another thing to ignore benefits,” Mr O’Toole said.

Vivienne Clarke

Vivienne Clarke is a reporter

Seanín Graham

Seanín Graham

Seanín Graham is Northern Correspondent of The Irish Times

LATEST STORIES