Belfast Telegraph

Economy Watch: Bridge to Scotland might have to stay as a pie in the sky

 

The Oresund Bridge, which features in Scandanavian drama The Bridge, links Sweden and Denmark
The Oresund Bridge, which features in Scandanavian drama The Bridge, links Sweden and Denmark

By Esmond Birnie, Ulster University senior economist

In recent years a Scandinavian crime drama called The Bridge has gained some popularity on British TV. We have also seen a small scale political drama relating to suggestions that serious consideration be given to building a bridge between Northern Ireland and Scotland.

Here is a high level summary of relevant considerations:

1. Where?

Probably from either the Larne or North Down areas to Portpatrick, a distance of just over 20 miles. The distance from Ballycastle to the Mull of Kintyre is much shorter but the further road travel time to Glasgow is about three hours.

2. Is it do-able?

As a non-engineer I cannot answer that. There are bridges/causeways of about 20 miles in the US and China but the North Channel may be unusual in terms of its depth and roughness of seas.

3. Cost?

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One recent estimate is £20bn-plus. As a rough rule, each mile of a "short" suspension bridge costs about £750m but this connection may be unusually difficult. Large infrastructure often has considerable cost over-runs. Improving road (and rail) access to the bridge could easily add another billion.

4. The economic benefits?

Perhaps the main one is that with lower transport costs out of Northern Ireland, we would be able to sell more and hence GDP would be higher.

Research (admittedly very dated) suggests that the cost differential between firms located in Northern Ireland and Scotland is two percentage points.

Assume the bridge could remove that differential and that half of Northern Ireland sales to Great Britain would travel across the bridge and also assume a one-to-one elasticity from lower costs or prices to sales.

All these assumptions are probably optimistic. An increase in Northern Ireland's GDP of about £100m is indicated.

Let's assume that there would be a similar increase based on trade moving in the opposite direction: a gain to GDP in the rest of the UK.

What about reduced travel times for individuals? There are about two million sea passenger journeys between Northern Ireland and Great Britain each year. Let's assume half would use the bridge and each save two hours valued at £20 per hour. That implies an economic gain of £40m.

Recent economic theory has emphasised the advantages of "agglomeration" arising from faster, cheaper transport: bigger and better labour markets and increased networking between firms.

The problem here is geography - having crossed the bridge there is still a two-three hour drive to Glasgow or Edinburgh and even longer to north west England.

The Oresund Bridge, the one featured in the Scandinavian drama The Bridge, may well have facilitated a lot of agglomeration between Sweden and Denmark but it is significant that Copenhagen and Malmo are only 45 minutes apart.

5. Benefits relative to cost

There could be a cost of at least £20bn spread over perhaps 10 years of building. We can perhaps assume a life of the bridge of 50 years: the Forth Road Bridge gave 53 years of service before being downgraded by the Queensferry Crossing in 2017.

It is not clear that the annual economic benefits would reach much above £300m. By implication once the benefits from the more distant future, say the 2060s, are depreciated into today's money it begins to look unlikely that the economic benefits would approach the costs.

6. Some tentative conclusions

It is notable that there have been calls for a consideration to be given as to the feasibility of the bridge. That feasibility should be investigated in detail.

The balance of economic benefits and costs does not have to be the sole basis of decision but surely it should be important.

Alongside the question of the benefits relative to the costs there is practical matter of how the bridge would be financed.

Any suggestion that we could expect much largesse from the EU, Scottish government, Irish government, or the US is probably fanciful.

HM Treasury may demand an exercise in burden sharing with Northern Ireland such as a considerable deduction from the Northern Ireland block grant: £300m for 30 years?

That would be following the precedent set by the corporation tax reduction proposals.

This would be the mother of all City deals.

There are, of course, many uncertainties about such a large scale project.

New technologies or materials might transform the analysis.

Maybe thousands of Scots would switch Spanish holidays for the North Coast.

If we really are going for a zero carbon future then that might mean an end to cheap flights.

A high speed electric train out of Belfast or Dublin to Paris might be necessary.

Any bridge would be a technological marvel and perhaps an object of beauty.

So was Concorde.

As a Scot who once lived in the shadow of the Forth Bridges I wish the proposal well but there is economic concept of opportunity cost - all the other things we could have spent the money on.

Belfast Telegraph

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