Business between north and south now worth £3.3bn, but concerns over future of disputed Brexit protocol persist, writes Allan Preston
New figures on cross-border trade show a thriving all-island economy, but the potential fallout over the Government’s Protocol Bill continues to worry experts.
According to Ireland’s Central Statistics Office, the value of goods flowing across the frontier into the Republic was up 23% between January and May compared to 2021.
The increase was worth an estimated €357m (£302.8m), bringing the total flow to €1.939bn (£1.6bn).
The figure was even higher for goods going the other way, with an increase of 42% bringing the total trade to €1.974bn (£1.674bn).
This is a jump of €586m (£497m) since last year.
Ulster University economist Dr Esmond Birnie claimed the boost in trade was masking other problems caused by the Brexit protocol.
He described it as “a wrong way round industrial policy”, and said Northern Ireland’s recent economic growth was actually behind the UK average.
Stephen Kelly of Manufacturing NI welcomed the trade figures, but also warned the Protocol Bill had damaged confidence in our ability to trade.
Elsewhere, the figures showed imports from Britain to the Republic were up 71% to €2bn (£1.7bn) compared to May 2021, while exports to Britain amounted to €1.5bn (£1.2bn).
Ireland’s overall exports amounted to €18bn (£15.2bn) — an increase of nearly €4.5bn (£3.8bn) compared to the same time last year.
Imports reached €12.8bn (£10.8bn), which was €4bn (£3.39bn) higher than imports in May 2021.
Last week MPs voted to reject changes to the Bill at committee stage.
The Bill allows ministers to rip up parts of the deal, an international treaty negotiated and signed up to by the UK Government.
It has been strongly criticised by the European Union, which has threatened to take legal action against the UK.
It could also spark a trade war between the bloc and the UK.
Most of the Conservative Party leadership candidates have indicated they remain committed to the Bill.
Mr Kelly said: “Northern Ireland is very dependent on external sales in order to bring in good, clean cash to run the rest of our economy.
“That big rise in exports filters its way down through our retail, our hospitality, buying homes and cars.
“So that’s why exports are really important. In that context, actually increasing our sales externally is very positive.”
He said the 23% rise in exports from here to the Republic during the first five months of this year should be seen in the context of a 61% rise last year.
“So, collectively, we’re bringing in probably an extra £1.5bn on where we were in 2020. That’s circulating in the Northern Ireland economy, which is a good thing.” But he cautioned: “These figures relate to the first five months of the year, and we do know from other surveys that on the introduction of the UK’s Protocol Bill, our manufacturers went from (being) the most optimistic to the least optimistic, with the biggest hit on order books inside one month.
“Confidence drained away from buyers in Ireland and elsewhere about Northern Ireland’s trading capacity.
“So, whilst we’ve seen this economic benefit reported today, there’s a concern that actually this Bill is already beginning to cause some economic damage to those critical external sales that we have for Northern Ireland.”
On the 71% boost in trade from Britain to the Republic, he said it was still unclear how much Anglo-Irish trade was passing through the region.
“What that trade from GB into Ireland shows is that the destruction (the protocol) caused Ireland’s economy in terms of getting goods from GB has settled quite significantly.”
He added a survey from the Northern Ireland Chamber showed traders were also “largely” getting to grips with the challenges in the Irish Sea.
But Dr Birnie argued the protocol was distorting the economy.
He claimed our economic growth had actually been lower than the UK average since the mechanism came into force last year.
“Whilst there are many things going on in the economy at the moment, part of the explanation for these outcomes could be the trade diversion impact of the protocol (some NI food suppliers have displaced GB ones in the southern Irish market) but also the harm done to sectors dependent on components and inputs coming from GB (parts of engineering),” he explained.
“One might say the protocol has produced winners and also produced losers. And that is true, but we cannot leave it at that.”