Businesses in Northern Ireland involved in all-island cross-Border trade have set up operations in the Republic to benefit from its lower corporation tax rate, a leading Belfast-based tax expert has said.
“We’ve had quite a few businesses who have expanded cross-Border, set up proper branches or companies, and intend to do more. So that’s certainly been a drive,” said Grant Thornton’s Alan Gourley.
He was speaking at the launch of a major four-year macroeconomic study of Northern Ireland and the all-island economy, undertaken by the Economic and Social Research Institute (ESRI) and the National Institute of Economic and Social Research (NIESR).
However, the traffic in setting up companies has been two-way, said Mr Gourley, with businesses realising that they can organise on an all-island basis: “”That’s been a bit of a trend and that goes both ways,” he said.
However, Mr Gourley, who is the chair of the Northern Ireland Tax Committee of Chartered Accountants Ireland, said he did “not have a single” Northern Ireland-based client who would claim that business is “flying” because of the effect of the Windsor Framework. Under the terms of the protocol, Northern Ireland, unlike the rest of the UK, remained in the EU single market for goods post Brexit.
“It just doesn’t happen. I suppose it’s a good mitigant for the changes that have happened, but I think everybody would prefer to go back to where we were,” he declared, partly because the Windsor deal only covered trade in goods, not services.
Some British-based companies are increasingly reluctant to trade with Northern Ireland because of the paperwork challenges posed by the Windsor deal, agreed to February 2023 and which keeps Northern Ireland within the European Union’s single market for goods.
However, Northern Ireland firms are being urged to learn how to deal with customs paperwork, with Mr Gourley saying that one client used to deal with a Leeds supplier, but now gets supplies from Cork and France and has a stronger business, as a result.
The ESRI/NISER macroeconomic study will be “really valuable” in the years to come in helping to answers to the impacts that policy changes could have on Northern Ireland, “to see how all these things” connect, said the ESRI’s chief executive, Alan Barrett.
Data about Northern Ireland is not gathered by the Office of National Statistics in London in the same granular detail as happens in the Republic by the Central Statistics Office, because NI is included among the UK’s regions.
One of the things that the study has shown to date is that Northern Ireland is affected in different ways to other parts of the United Kingdom by policy changes that are set down in London, said researcher, Adele Bergin.
Traditionally, the Northern Ireland economy is more dependent upon public services than elsewhere in the UK and has been less prone to peaks and troughs, but, equally, less likely to benefit from the gains.
Increases in national insurance contribution rates and the living wage have provoked complaints from businesses across the UK, with evidence that jobs are being cut ahead of their introduction.
In Northern Ireland, businesses argue that the impact of both changes will be particularly acute because NI has a higher-than-average number of people working in manufacturing, compared with the rest of the UK.
Angela McGowan, the Confederation of British Industry’s Northern Ireland director, said Northern Ireland has particular issues because it has a more rapidly ageing population and has seen less immigration than elsewhere.
Danny McCoy, the director general of the Irish Business and Employers Confederation (Ibec), said the principal value of studies as the one carried out by the ESRI and NISER is that it creates a consistent baseline on which judgments can be made.
However, he said the study should not be read as offering a judgment on the arguments surrounding the possible unification of the island, because such a move would create too many “structural breaks” and too many things will have changed.
