Belfast Telegraph

Thursday 24 April 2014

Economic stability and growth for Northern Ireland outside EU sphere is debatable

Stability: The European Union

Would the Northern Ireland economy be stronger and grow faster if the United Kingdom (with or without Scotland) was inside or outside the European Union?

Even the contemplation of the UK becoming detached from the EU will create unwelcome uncertainty.

The debate about the renegotiation of the application of the EU rules on topics such as immigration, the working time directives, and aspects of social policy, will be contentious in Brussels and in many of the other member states. The UK government risks failing to negotiate any significant changes to the treaties and then fighting a referendum campaign having essentially lost a renegotiation bid. Not an attractive combination.

A difficult but conceivable stance to argue will be that, even though renegotiation has changed very little, there remains greater benefit by staying as a member of the EU than by leaving the EU. The referendum debate has the potential to be further motivated by reactions to a lack of sympathy or even hostility from other EU countries which reject (what will be seen as) the efforts of the UK Government to cherrypick its terms of EU membership.

Retaining EU membership, one way or another, even with some unwelcome obligations, is in the economic interest of Northern Ireland and the UK. Bad negotiating strategies may unintentionally make a departure of the UK from the EU more likely. Some political parties may take a defensive stance in the forthcoming European Parliament election. Attitudes may depend on the outcome of renegotiation. That stance sets the trap where, even if renegotiation fails, that should not necessarily mean that the UK should withdraw.

Even if renegotiating parts of the treaties fails, the best interests of the Northern Ireland economy are that businesses should continue to enjoy the trading advantages of being part of the EU, that farming should continue to enjoy the scale of support created by the Common Agriculture Policies and that the ability to attract investment and jobs from international businesses should not be circumscribed.

Whether the argument is pitched on a world stage or pitched against the local strengths and weaknesses of the Irish economies, any political decisions that make Northern Ireland a less outward-looking society, with less ability to generate higher incomes from successful external trade and investment, will be regrettable.

A safe assumption is that the Irish government will remain firmly ensconced in the EU and, in addition, wedded to using the euro.

In a post-referendum world, with a possible UK withdrawal from the EU, Northern Ireland faces major handicaps.

Even if Northern Ireland introduces a comparable rate of corporation tax to Ireland, Ireland would continue to offer foreign investors the assurance of integration into the EU marketplace and what will be hoped to be a stable European currency. The work of Invest NI will become more difficult, first because of possible trading and financial instability and, second because of the perception of being outside the European market place.

For the farming and food industries, the prospect of a split away from the European agriculture policies and, in particular, the single farm payment system invites the question, would the UK government put in place policies that would also lift farm incomes? An alternative single farm payment system, together with its refinements which can be used to support rural development, is not an attractive proposition for a UK government. The farming community will be hesitant about an EU withdrawal.

Of course, there are unpopular strands to the EU experience. Nevertheless, the control on State Aids, the insistence on competition rules (avoiding local protectionism) and development of EU-wide rules for trading standards, all can be seen as too interventionist, except when used in Northern Ireland's favour.

The European Parliament elections and the future of a UK referendum should now be high on the agenda of local debate.