17 August 2019 Edition
The economics of a united Ireland economy
Pearse Doherty, the Sinn Féin spokesperson on Finance and Public Expenditure outlines the economic challenges facing the island economy as a result of Brexit. Pearse makes the case for a referendum on Irish unity with the prize of a transformation in economic policy across the island, and a democratic people centred united Ireland economy the centrepiece of a new Ireland.
Irish unity is front and centre in political debate
In recent months, we have witnessed a farcical political drama unfold at Westminster. In this production, the people of this island are expected to play the part of the bumbling fool, patiently waiting for the British government and MPs across Westminster to agree a clear and realistic path forward.
It will be no surprise to Irish people absorbed in this drama that, though they may feel like mere spectators, their lives and livelihoods are completely intertwined in whatever Britain decides to do.
This is the case today, as it was on 23rd June 2016 when millions of British voters made a judgement that was completely contrary to the wishes of the people of Ireland.
And yet, unless something drastic changes, Brexit will profoundly alter the lives of citizens on this island, especially those living in the north of Ireland.
It is unsurprising, then, that the issue of Irish unity has been placed front and centre in the political mainstream. As both a protection of the identity and democratic wishes of northern citizens, and a logical solution to the Brexit impasse, the prospect of Irish reunification has found many new, and sometimes unlikely, plaudits.
Central to this discourse are the economics of a united Ireland – who would be better off and why, what would communities stand to gain?
This is a discussion that should fill every home in Ireland. It is urgent, it is real, and now more than ever it requires people to understand the facts around the economics of unity, and dispel the myths and misconceptions.
This piece should be taken as a small, but hopefully convincing, contribution to that debate.
• Shipbuilding was the engine of industry on the island of Ireland
The north of Ireland – a story of mismanagement and decline
Perhaps those most in need of convincing are those of a unionist background from the north of Ireland.
Put simply, the partition of Ireland and the maintenance of the union with Britain have been calamitous for those on the northern side of the border, regardless of their background.
Pre-partition, Belfast was the beating industrial and productive heart of the island. The city’s renowned shipbuilding and manufacturing prowess was the engine of industry on the island of Ireland – fully 70% of Ireland’s productive output was from the six counties that would soon be partitioned.
Today, this booming industrial hub is little more than a spectre of centuries past. For decades the economy in the north of Ireland was managed and directed in the interests of a few. A small class of wealthy men, whose personal fortunes were tied with the British Empire, ensured that Catholics and working-class Protestants would serve them.
Belfast fell into a long decline. Discrimination, exclusion, and mismanagement saw the northern economy fall well short of its potential, never a fully integrated part of the British economy, and divorced entirely from the burgeoning economy in the south.
The 26-Counties emerged as a sovereign state endowed with the ability to fully determine its own economic affairs, and chart an independent economic course. Despite the overwhelming challenges facing the 26-County Irish economy, and though many of these challenges were caused by successive Cumann na nGaedheal and Fianna Fáil governments, the state was still able to formulate an independent economic strategy. No one can credibly claim that the overarching macroeconomic decisions made in London were made in any form of consultation with the people of the north of Ireland.
Citizens in north were an afterthought, if they were spared any thought at all. Their interests were spurned and rejected, and the denial of full autonomy to create economic policy in the sole interests of the north of Ireland rendered its citizens vassal onlookers beholden to the whims of Westminster – in the present Brexit context, I wonder does any of this sound familiar?
Fixing the legacy of partition
All of this is important, because it places the impact of partition squarely in a long history of neglect, waste and economic mismanagement imposed on the north by Britain.
Proponents of the Union with Britain must answer why the former economic engine of Ireland, its north-eastern most six counties, now bears some of the highest rates of poverty and deprivation anywhere on these islands.
They must explain why a century of division and partition has produced such shockingly poor economic outcomes. They must contend with the fact that wages, economic growth, and productivity in the north of Ireland are lower than in any region in Ireland or Britain – even before the full impact of Brexit is truly felt.
Deployed as if it serves the purpose of a logical argument, opponents of Irish unity will point to a fiscal deficit in the north, without asking why or how this deficit has developed in what was once the wealthiest portion of Ireland.
Do they expect that the deficit will improve when the north of Ireland is dragged out of the EU against its will, loses access to huge tariff-free export markets, suffers job losses and a huge loss of potential economic growth? The British government’s own analysis confirms a no-deal will result in a loss of 12% of GDP.
As we face into a chaotic Brexit the facts of the north’s economic history since partition are often overlooked. The essence of the pro union argument is that: the northern economy has been forced into a decline so significant that it is now in fiscal deficit, and it should therefore stay hooked to one of the slowest growing economies in the world. It must plod on with no real fiscal or monetary powers, and with major economic policy forever set in Britain in the interests of Britain. Indeed, the north must now also continue to endure all of this outside of the EU.
I’ll let you as informed readers assess the credibility of this argument now in 2019.
The Irish economy
In utter contrast, the economy in the south of Ireland has been completely transformed since partition. The population in the south of Ireland is the youngest in Europe. There is a higher proportion of people in the south of Ireland with a 3rd level qualification than in most other countries in the world. Irish citizens have reimagined their island as a liberal, tolerant and outward looking society, attracting talent and ideas from around the world.
These are among many reasons why the Irish economy is the fastest growing in Europe, at 6.7% of GDP, and one of the fastest growing in the developed world. The British economy meanwhile remains mired in a state of stagnant productivity and rock-bottom growth of just over 1%. It is fundamentally imbalanced and unequal, with bankers in the City of London exacting more influence over economic policy in Westminster than all of the people in the north of Ireland.
As a republican, however, I do not believe the Irish economy is without fault. I passionately believe in building an island where economic growth involves all citizens, guarantees a living wage and a dignified standard of living, protects the environment, and funds world-class public services such as a universal health service, low-carbon transport and a cutting-edge education system.
Successive Irish governments have singularly failed to manage economic growth in a way that creates this type of society.
The point, however, is that the Irish economy is one of the wealthiest on the planet per capita, and growing. If the political will existed, if a Sinn Féin government could direct economic policy, it has the capacity and available resources to invest in the creation of a modern, equal, and prosperous all-Ireland republic, capable of unlocking the full potential of every community on the island.
Moreover, as members of the EU, a united Ireland would be more than able to draw upon hundreds of billions of euros from European investment funds to develop the northern economy by investing in infrastructure and improved productivity.
This is urgently needed, of course, to reverse the Westminster imposed path of decline. However, the ranks of the British establishment remain gripped by a Thatcherite obsession that has seen relentless attacks on the vulnerable and on basic public services, with citizens in the north paying a heavy price for constant austerity. This is a course set to continue post-Brexit, when assistance and investment for people in the north will be needed most.
With this in mind, the question before voters in the north of Ireland, especially those considering the future viability of the maintenance of the union with Britain, is whether they can afford to maintain this union for much longer?
Facing challenges together
Because Brexit is just one of many significant challenges we must tackle, and that Ireland must confront together. Sinn Féin is cognisant of the rapidly changing global economic landscape, and we insist that only an Ireland united can put itself at the forefront of that change.
Economies around the world will have to tackle profound challenges to how we perceive work, and how we take part in economic activity. Automation is set to replace two in every five jobs in the medium term, climate change is forcing us to invest to rapidly decarbonise our economies, and Ireland must navigate an age of rising global giants such as China, India, and the African continent.
Not only does Westminster create policy in the sole interest of Britain, they also continue to deny basic economic levers that would allow the north to flexibly and creatively respond to these huge challenges.
With strong economic prospects and with citizens in democratic control of their economy, the south of Ireland, under real and progressive political leadership, would be primed to not only react to these changes, but to have a place in shaping them. In this context, there are huge opportunities for the north of Ireland in this uncertain future, but not while we remain passive recipients of decisions made in London.
Elected-representatives in Belfast cannot borrow to invest, like all other successful economies on earth. It has effectively no control over its levers of taxation. Stormont is effectively handed an ever-dwindling piggy bank year on year in the form of a block grant, and is expected to create inclusive and sustainable economic growth with no meaningful powers.
It is simply illogical to assume that without real control over the economy, citizens in the north stand to gain from these global shifts, from a Brexit imposed upon them, or being forced to comply with block grants and economic policies formed in Britain.
This is especially true for the border corridor, where, for almost a century, once heavily integrated communities have been incentivised to compete instead of cooperate. For almost a generation, they have used different currencies, and see a loss of income across either side of the border depending on the strength of either currency at a particular point in time.
Back-to-back development of services and infrastructure has led waste and inefficiency. Real sovereignty for workers and decision-makers in the north would transform their ability to manage and intervene in the economy in a manner of their choosing.
• With Brexit looming – Sinn Féin is calling for a referendum on the reunification of Ireland
The growing consensus
Central to all of this growing debate, however, is the clear acceptance of these myriad arguments by a growing number of influential mainstream economists, academics, commentators and financial journalists. Foremost among them are Kurt Hubner, whose economic modelling projects a massive €38bn boost for the island economy in the event of Irish unity. Paul Gosling, David McWilliams and others have outlined their straightforward and evidence-based case for how we can all prosper from Irish reunification. A large body of publicly accessible work has also dismantled false claims about the nature of the subvention in the north.
The fact is that as the debate around the economics of Irish unity becomes more fact-based, it swings decisively against the narrow and ill-informed economic miscalculations of opponents of this project.
Quite simply, with Brexit looming, and a host of existential challenges confronting Ireland and the global economy, there are really two likely and drastically conflicting futures for Ireland and our island economy.
One sees the north of Ireland linked to the fortunes of post-Brexit Britain with next to no control over its economic affairs. The other, sees the north reaching its full potential as a wholesome and essential part of a united Irish economy, with more available economic powers and immediate control over how to use those powers.
Sinn Féin is calling for a referendum on the reunification of Ireland, a border poll, to put these two choices before the people of Ireland, one of potential and ambition, and the other of objective squander and wasted opportunity.
The time has come for a serious embrace of the economic benefits of Irish unity, and for an inclusive, mature and rational debate about how we can deliver them.
• Pearse Doherty is a Sinn Féin TD for the Donegal constituency