Hard-border return 'would be disruptive for Northern Ireland trading with Republic'
Think tank says Stormont must fight to remain in customs union
The Northern Ireland Executive must fight to remain in the customs union to avoid a return to a hard-border with the Republic which would have a "disruptive" and "unique threat" to cross-border trade, a leading think tank has warned.
And if the UK leaves the union, it will mean a return to border checks with the Republic, according to the Nevin Economic Research Institute (Neri).
It says it is a "ridiculous" concept that the UK could leave the customs union, but not introduce border checks.
Economist Paul MacFlynn said it is an "in or out" decision.
Neri has called on Stormont and Westminster to prioritise remaining part of the customs union amid Brexit talks, which will have a significantly bigger impact on Northern Ireland, rather than staying in the single market.
Countries within the customs union, which are not part of the EU or single market, include Turkey.
Neri is also calling on the Executive to fight for the retention, and further devolution of powers around employment law, energy and consumer issues following the EU exit.
But it appears the vote to exit the EU has had little impact on the economy here, according to its latest quarterly forecast.
Neri says there has been "little indication of any slow-down in the UK economy post-referendum and the prospects for the Northern Ireland economy in the very short-term look reasonably stable”.
Mr MacFlynn said it is “possible that Northern Ireland remains in the customs union” in the event of a hard Brexit. In his report, he said Brexit, and leaving the customs union, will have an “immediate and direct threat to trade for Northern Ireland.”
The report said that there is an “economic case” for Northern Ireland to remain in the customs union, even if the rest of the UK leaves.
However, while that would mean no hard-border with the Republic, it could lead to custom checks on goods entering Northern Ireland from Great Britain, Neri said.
The report has said the impact of a hard Brexit in Northern Ireland could mean a 0.5% cut in ‘real wages’, due to the weakness in sterling, an erosion of cross-border trade as input costs increase, and a restriction on inward migration hitting skills and economic activity here.
As for agri-business, Northern Ireland could be hit with tariffs as high as 22.3%, according to the World Trade Organisation.
And on freedom of movement, Neri said Northern Ireland has benefited from migration.
On the upside, the report said the weakness in sterling is “likely to have boosted cross-border trade” as well as increasing employment in retail and hospitality.
Meanwhile, speaking about the case for reducing corporation tax to 12.5% here, Mr MacFlynn — which has been critical of slashing the levy — said it is “dead and it’s time to bury it”.