Northern Ireland would not benefit from staying in the EU single market if the rest of the UK leaves, according to an analysis from the Nevin Economic Research Institute.
The Irish think tank says the increasing likelihood of a “hard Brexit” is already having an impact on the local economy through the reduction in the value of sterling. It expects this to feed into domestic inflation next year, which will likely rise to 2.7 per cent.
“Upward pressure on wages and increased input costs more generally will eventually erode Northern Ireland’s current advantage in cross-Border trade and exports more generally,” the institute says.
It said the UK leaving the customs union represented “a more immediate and direct threat to trade” in the North.
“Rules of origin procedures will lead to increased bureaucracy for firms in Northern Ireland, and will inevitably lead to the re-establishment of customs checks on the land Border with the Republic of Ireland,” it said.
Economic case
According to the institute, there is an economic case to be made for the North staying in the customs union, though this would inevitably lead to checks on goods entering Northern Ireland from the UK.
“Outside of the customs union, the Northern Ireland Executive should seek a regional presence for [Britain’s] department for international trade in order to provide support for firms engaged in cross-Border and EU trade,” it said.
If the UK does seek access to the single market through equivalence arrangements, the institute said, then the Executive should seek additional powers in product and market regulation to maintain optimal arrangements for both EU and British trade.
“Overall, a hard Brexit is likely to be more economically disruptive for Northern Ireland. Remaining within the single market and, most importantly, the customs union would be the optimal situation.”
