The Northern Ireland economy had a chance post-Brexit to reinvent itself using the terms of the protocol. This opportunity is now being spectacularly squandered by the politically-driven tactics of the DUP and Boris Johnson’s government.
Just as the economic evidence is building about the economic damage of Brexit, the DUP is failing to see that Northern Ireland has a way to make the best of it.
To get a bit of context, we need to pull back a bit. The protocol was a last-minute compromise which allowed British prime minister Boris Johnson to "get Brexit done" and meant the European Union avoided a crash-out Brexit which in turn would have created big problems for Ireland.
Having been done over by the protocol deal struck between London and Dublin, it is hard to know, politically, what the DUP is now playing for
The long fuse leading to today's rows was lit when Johnson and Leo Varadkar met in a country house near Liverpool in October 2019 and the protocol plan was launched, unblocking three years of talks. However, when the deal was struck a lot details still had to be worked out.
The resulting element of fudge may have suited both sides at the time. But leaving the small print of how this would work was storing up problems for the future – and everyone knew it at the time. Trade rules are all about detail and in turn these have a real impact on people and businesses.
The protocol put in place a structure which could have worked but inevitably required some checks on goods crossing the Irish Sea from Britain to the North.
The logic of Brexit was that these checks had to take place somewhere. London’s claim that it never really signed up to these is completely disingenuous, of course. And the protocol has created some problems – partly because the details are being worked out on the fly and inevitably some issues were not foreseen.
Precious advantage
But for Northern Ireland, the deal offers a precious advantage – ongoing access to the EU’s single market for goods and to the British market. Rather than grabbing this with both hands – and then trying to negotiate to reduce the burden on trade crossing the Irish Sea – the DUP has focused purely on the negatives.
And so, together with a British government keen to distract from the building economic cost of Brexit by rising another row with Brussels, it is threatening to blow the whole thing up.
The political claim is that the protocol is hugely damaging to the North’s economy. But the National Institute of Economic and Social Research in the UK pointed this week to a slightly better recent economic performance in Northern Ireland compared with the UK average.
It concluded: “This is partly an outcome of the Northern Irish protocol and its special status in the Brexit arrangements, including better trade and investment conditions as part of the EU’s single market and customs union.” This, of course, is an inconvenient truth for the DUP.
The best economic route forward is to jump on this “special status” and try to minimise the disadvantages. The Irish Government, much as the DUP’s tactics will irritate them, will support this route. But the threats by the British government to introduce domestic legislation to overturn parts of the protocol will send the EU back into its bunker. Having made offers to improve the protocol already, it will be loath now to respond to threats.
And so the economic advantages the protocol could have offered are at risk of slowly seeping away. Not only are its terms in doubt, with London threatening to do away with checks, but so is the political stability of Northern Ireland and the ability of its politics to form an executive.
The DUP – and the Conservatives – see political dangers in recognising the benefits of access to the EU single market in goods. From a calculating unionist perspective, here might be a way to make the Northern Irish economy work post-Brexit and provide a counterpoint to the economic arguments which Sinn Féin will make about united Ireland. But no.
Opportunities
The protocol is far from perfect, but then it is trying to work around the economic car crash of Brexit. It does not offer Northern Ireland access to the EU single market in services, for example. But the ability for manufacturers to access directly the UK and the EU single market for goods offers a potential USP to attract big companies and build domestic exporters.
Already the North’s businesses are taking advantage of the opportunities and are clearly calling for a functioning executive to be put in place and for the protocol to be “worked”. But business needs stability and a programme of investment in areas such as education and infrastructure – instead the North’s politics are now moving in the other direction.
This brings political and economic dangers for the Republic too. If goods are not checked coming from Britain to the North will Ireland in time come under pressure to check them at the Border or as they leave the island of Ireland for European ports and airports? Dublin will have hoped all this was put to bed, but it has not been. The remorseless logic of Brexit allows no escape.
Having been done over by the protocol deal struck between London and Dublin, it is hard to know, politically, what the DUP is now playing for. But assuming the UK does publish domestic legislation to override parts of the protocol, there will be another hot and tedious summer of rows. Whether this legislation ever becomes law remains to be seen, but the EU’s patience will be running short.
Businesses will have already been asking themselves about the longevity of the protocol. But these fears would probably have faded into the background if all sides committed to working it for the benefit of the Northern Ireland economy. Now the opportunity is being let slip. Politics is again trumping economics and the costs in the long term could be really significant.