Belfast Telegraph

John Simpson: However we leave, Northern Ireland's sure to suffer

By John Simpson

The economic analysis of the options currently under consideration, published yesterday, is a competent, professional report that deserves to be taken seriously.

Leaving the EU, which is essentially a mechanism to liberalise trade and payments, will inevitably initially disrupt some of the flows of trade and payments meaning that, for the economy as a whole, there will be less efficiency.

There is little surprise in the conclusion that Brexit in almost any shape will have a negative influence. A 2% difference after 15 years when EU membership is compared with the Government's proposed Brexit treaty is small, but it is a downside.

The critical feature of the official forecasts is not that Brexit is expected to have an initial negative outcome, it is that we now have a data on the different Brexit options.

Claims that these assessments are a simple, crude fear factor or are based on flawed assumptions, are a misreading of arguments that deserve the credit of being considered as a useful contribution to the debate now gripping the political arena across the UK.

To say that economic forecasts are usually wrong, or that forecasts purporting to reach ahead for 15 years are not credible because so much can go awry in the changing economic environment, is dismissive of the essential, well understood dynamics of the way that the economy works.

The most advanced economic analysis used by the Treasury and independent organisations is internationally reputable.

Yes, economic forecasts will usually have margins of error because so many decisions made by businesses, individuals and Government are subject to variations as events unfold.

That variability should not be used as a criticism to devalue the results.

The Treasury analysis will have evaluated sensibly the variables and built a logical result with a predictable margin of error.

The key results published by the Government suggest that the Brexit deal now ready for debate would have a small marginal negative effect on the economy.

A no-deal Brexit would hit the economy hardest: a 9% loss of income in 15 years, or possibly about £250bn. This compares with a Brexit linked to a free trade agreement that might mean a 6.5% loss of income.

The Treasury papers clearly favour the deal now before Parliament for all the reasons that the Prime Minister repeats frequently.

If the Government Brexit deal is implemented, Northern Ireland may expect to experience broadly the same negative influences that apply for the UK, possibly on a larger scale. The NI-Ireland backstop is a necessary part of the proposed Brexit deal, but even it would not prevent some trade and income disruption because of extra degrees of relative uncertainty.

There are no official estimates of the way the Brexit options would differ when applied to Northern Ireland. However, the degree of disadvantage would be higher in Northern Ireland in a no-deal result, which could damage cross-border business and businesses.

The UK loss of over 9% of gross income might be significantly higher here.

At the unmerited risk of being accused of playing on the fear factor, caution suggests the Northern Ireland loss might be nearer to 15%: jobs lost, investment deterred and changed migration.

John Simpson is an economist and commentator

Belfast Telegraph

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