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Vote to leave could see Northern Ireland hit with £1bn loss in funding, warns expert

By Dearbhail McDonald

Northern Ireland's economy could lose £1bn a year through the loss of European Union and devolution funding in the event of a Brexit, according to an international expert in regional and urban economics.

Dr Leslie Budd, reader in Social Enterprise at the Open University Business School and Chair of the Urban and Regional Economics Seminar Group (URESG), also says loss of research and development (R&D) funding to Northern Ireland's university sector will inhibit all-island research on renewable energy, agri-business and sustainable fisheries.

Northern Ireland receives approximately £500m annual funding from the EU and received nearly £2.5bn between 2007 and 2013 with respect to agriculture, structural funds and the PEACE programme.

It is also projected to lose up to £500m per year in so-called Barnett Formula (devolution) Funding when it introduces a new devolved corporation tax rate of 12.5% - equivalent to the Republic's - from 2018.

"Brexit will undermine the logic of a devolved corporation tax in that the relative costs of inward investing firms in the north will rise, as Brexit will increase transactions costs, including the cost of doing business across the border," said Budd.

Budd, author of The Consequences for the Northern Ireland Economy from a United Kingdom exit from the European Union, was speaking ahead of a Brexit discussion forum hosted this Thursday by the Foundation for Fiscal Studies.

"Trade is an issue, but as 50% of EU trade is between firms, (regionally based) Global Value Chains are crucial and those linkages and spillovers across the whole of Ireland to the rest of the EU could be broken," added Budd. More than 60% of goods exported from Northern Ireland go to Europe and direct farm payments to farmers there account for almost 90% of farm income.

Some 81% of businesses want to stay in the EU, says the Northern Ireland Chamber of Commerce and Industry - despite high-profile political endorsements for a Brexit by First Minister Arlene Foster and Northern Ireland secretary Theresa Villiers.

Northern Ireland is more vulnerable to a Brexit than elsewhere in the UK, according to forecasters Oxford Economics.

"There is nothing based on the evidence of the past 30 years which suggests that the British Treasury at Whitehall is suddenly going to morph into a benevolent almshouse doling out largesse to Northern Ireland should we leave Europe," said Tom Kelly, chairman of the Northern Ireland Stronger in Europe campaign.

"This is Tweedledum and Tweedledee politics, which puts real people with real jobs at risk," he added.

Belfast Telegraph