Brexit uncertainty makes life difficult for Invest NI
The action plans for Invest NI are becoming more difficult to develop. The uncertainty about the likely outcome of the Brexit negotiations puts large question marks over the shape of UK economic policy.
Into that degree of uncertainty, questions about economic policy in Northern Ireland, as well as Scotland and the English regions, face major choices.
There are two strategic issues which will impact on businesses. First, many firms await anxiously the regulatory framework that must be agreed to ensure the absence of a hard border.
The gentleman's agreement between the UK and the EU, on trade, payments and the movement of people, is a worrying example of the use of constructive ambiguity.
Authoritative but mutually contradictory interpretations are now circulating. When the operational details of how we avoid a hard border reach the point where technocrats try to bridge the divergent expectations, there must be a fear that the earlier statement by President Tusk, on behalf of the Commission, suggesting the EU acceptance of an Irish veto, will re-emerge. The ill-defined common travel area endorsement may open more options than some people at Westminster realise.
The second strategic issue lies in the conclusions yet to be reached on the future shape of an economic relationship between the UK and the 27 members of the EU.
Even at this late stage, the ambitions for that relationship have not been specifically detailed as an agenda by the UK Government. The relationship faces obvious tensions.
Many critical interest groups would like to see a close relationship where the UK continues to trade with the EU with only small changes in the arrangements, and at the same time the Government is free to make new trading agreements in the rest of the world. The UK stance assumes that it would make its own policies to limit immigration and would develop flexible UK approaches to any questions of regulatory alignment of trading standards.
There is no surprise that, seen from the EU perspective, the Government's approach should not be allowed to become a means for the UK to have its cake and eat it. There have been clear policy statements that the UK cannot leave the EU while continuing to enjoy all of the benefits. The EU will want to negotiate a price, whether a continuing associate fee, an agreement on regulatory alignment (including intellectual property rules), or specific trading tariffs with degrees of commercial protection.
That brings the discussion back to possible local institutional arrangements. How should local agencies such as Invest NI prepare for life after April 1, 2019, when the UK has left the EU? Should Invest NI advocate a close, minimum change economic relationship with the EU? Would Invest NI see some advantages to be gained by suggesting a continuing regulatory alignment of the NI administration, along with the UK Government, to minimise any trade disruption?
As (or if) a close economic relationship continues, would Invest NI accept that it may be advantageous to continue to accept the State aid rules of the EU? How would a decision on (dis)continuing the State aid rules interact with the merits of a change in corporation tax rates in NI?
Alternatively, would leaving the EU create the freedom to reconsider the complete range of business assistance to attract FDI?
If after Brexit there is no final UK-EU agreement, the policy agenda will need major surgery. The break could threaten the ability to attract external investment.
Outside the EU, our economic progress will become more difficult to design. Is anyone in Stormont and, or, Invest NI planning for such an eventuality?