Could an all-island economy be part of the Brexit deal?

Perhaps the most interesting phrase in the 8 December agreement between the UK and EU was that, in the absence of agreed solutions, not only would the UK maintain full alignment with the rules of the Single Market and the Customs Union which support North-South cooperation in Ireland and protect the 1998 [Belfast] Agreement, but also which support “the all-island economy”.

This was expanded upon by EU chief negotiator Michel Barnier’s senior advisor, Stefaan De Rynck, in a speech to Chatham House in London on 18 December. He said if a UK-EU conversation on “specific solutions” for Ireland’s “unique circumstances” did not solve the issue of the 8 December commitment to have “no hard Border, no physical infrastructure, no Border checks”,  we have the solution” (my emphasis added).

That solution, he said, is “full alignment of current and future rules for the Single Market and the Customs Union” so as to “support North-South cooperation, the all-island economy and the protection of the 1998 Agreement”. He repeated “that is basically the design of the Irish solution for the future”, adding that what is in the  December deal, including this commitment to support an all-island economy, would become part of a legally-binding international agreement.

This is most intriguing. Leaving aside for the moment all the ambiguities and contradictions in the 8 December wording, I was struck by that one surprising phrase, never seen before in any British-Irish agreement (to my knowledge), that full UK-EU regulatory alignment would support “the all-island economy.”

What is the all-island economy? The Irish business confederation Ibec has documented the dramatic expansion of trade and business between the Republic and Northern Ireland since the Good Friday Agreement 20 years ago. It points out that this process was greatly aided by shared EU membership, which removed many of the regulatory and border barriers between the two jurisdictions, and provided a broad, supportive political and administrative context – and often an all-island approach – for investment growth and job creation.¹

Prior to the establishment of the Single Market in the early 1990s, the Republic and the North had “a dysfunctional economic relationship”, says Ibec. Today, however, cross-border economic activity has risen to EU norms: for example, 56% of Northern Ireland goods exported to the EU in 2016 went to the Republic of Ireland. In many cases this is driven by SMEs as well as large firms (like Diageo and BT) operating an all island business model. Tens of thousands of people now cross the border in both directions to work each day.

Ibec and the Confederation of British Industry (CBI) in Northern Ireland have set out detailed investment proposals to underpin the path towards “a peaceful, connected, prosperous island of 10 million people by the middle of this century.”² Realising this ambition, they say, requires ongoing close cooperation and collaboration, a stable political and economic backdrop, and major investment.

In my humble opinion, this is the way forward rather than any mad, deeply destabilising, demography-driven agenda aiming at a hair’s breadth vote for Irish unity in some future Border Poll (and damn the consequences). To the extent that I have ever met Northern unionists willing to contemplate some eventual all-Ireland political rapprochement, it has been among business people impressed by the Republic’s spectacular economic advances (with occasional spectacular reverses) in recent decades.

The economy of the Republic of Ireland is now booming again. It has been the best performing economy in the EU for the past four years. Economic growth of over 4% is projected for 2018, as is full employment. In a 2016 EU Quality of Life survey, the Irish ranked fifth behind the Austrians, Danes, Finns and Luxembourgers as the most contented people in Europe. And people from all over the world are flocking to the Republic to work in its dynamic IT, pharmaceutical and other industries. Given their deep and fearful attachment to their British identity, I am not saying that such facts and figures will lead to significant numbers of Ulster unionists becoming attracted to Irish unity.  But they’re a better hope for the future than fear-inducing Sinn Fein rhetoric about unity after a 50% + 1 referendum vote .

The originator of the ‘island of Ireland’ economy idea back in the 1990s, the late Sir George Quigley, used to talk frequently about how the North-South economic relationship had been transformed over the short period of 20 years so that it came to seem absolutely normal and acceptable to all but the most hard-line unionists. And how that economic relationship had in turn helped to transform human relationships across the border – far more so than the continuing deep inter-communal mistrust had done within Northern Ireland.

Some beyond ingenious UK-EU arrangement to keep an effectively borderless ‘island of Ireland’ economy flourishing while the UK leaves the Single Market and Customs Union has still to emerge. The clause which the DUP insisted on having inserted into the 8 December agreement – that in all circumstances, Northern Ireland’s businesses would have “the same unfettered access” to “the whole of the UK internal market” – almost certainly rules out any kind of economic border in the Irish Sea. In any case, the leading Irish economist, John Fitzgerald, has pointed out that such an outcome would not be desirable from Dublin’s viewpoint, because in that event the North’s huge reliance on British imports would lead to major damage to its economy, more political instability and thus threats to the peace process.³

So the conundrum remains. But also the fascinating possibility that far better brains than mine in Dublin, Belfast, London and Brussels are currently trying to work out how an ‘island of Ireland’ economic union can sit alongside a UK political union outside the European Union but with some continuing close relationship with it. It’s at times like this that senior politicians and civil servants earn their excellent salaries.

¹ The quotes in this and the following paragraph are from Brexit: Challenges and Solutions (Priority 4: Ireland’s all-island economy)

² Connected: A prosperous island of 10 million people. Ibec and CBI (2016)

³ ‘Leaving single market and customs union is incompatible with ensuring no borders’, Irish Times, 8 December 2017



This entry was posted in British-Irish relations, Cross-border cooperation, General, Ireland, Europe and the world, Northern Ireland, Republic of Ireland. Bookmark the permalink.

One Response to Could an all-island economy be part of the Brexit deal?

  1. Diarmaid Mac Aonghusa says:

    The obvious solution for this is if the two nations could belong to some sort of pan European organisation that had a single market and customs area so that trade could be done in the easiest way possible. Some sort of Union of Europe perhaps.

    Is there any chance that some of our unionist brethren might begin to realise that the English have little interest in them and that the continuation of the status quo – particularly in light of Brexit – is doomed to long term failure. The economy of Belfast and NI has become steadily weaker over the years and it only survives on the cash sent from London. We all know this. And surely, at some stage, the patience of the English taxpayer will run out.

    Two things in recent times show just how artificial this “Britishness” of NI is. The first, much discussed one, was when the English had to be told who the DUP were as they were going to be enabling the continuation of the May government after her election fiasco. Did no-one in NI think it odd that they – more British than anyone in the empire – were of such irrelevance to the English that they were barely aware of their existence? The second was the recent appointment of a new Secretary of State. All of the discussions were about how this would effect the new Secretary’s career path and why she had been given the most hated cabinet position of all. Was she being sent out to the remote wilderness of NI to test her mettle? This was even joked about by NI journalists who all know the truth.

    There is only one sensible, logical solution to the economic challenges and that is a single all-island economy. This might give the chance for NI to be part of a functioning real economy and not surviving on the handouts of an increasingly frustrated benefactor.

    Long term there is no future for NI in glorious isolation as the tail end of Brexit land. Its success can only be assured by being part of the EU and a part of the Irish economy. One only has to look at the economic changes of the two parts of the island over the last 40 years to see the reality.

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