POINT OF VIEW. Northern Ireland’s economic challenges

Smallest nation in the UK with its 1.8 million inhabitants (compared to 4.9 million people living in the Republic of Ireland), Northern Ireland suffers from low productivity, private investment and insufficient public as well as a low level of secondary and tertiary education by European standards. However, structurally, the unemployment rate is low (less than 5% before the health crisis) and the standard of living of Northern Irish people rather high and close to that of the British. The fact that Northern Ireland belongs to the United Kingdom explains this situation: salaried employment is 32% public there, while transfers – in the order of 15 to 20% from the United Kingdom – help maintain the standard of living of households.

Today, a few months after a Brexit that re-established a maritime border between the United Kingdom and Northern Ireland, and in the face of the tensions that materialized in Belfast during Holy Week, two options are possible. The first is that of maintaining Northern Ireland in the United Kingdom, which is what the “unionists”, who are mostly found among the Protestants, want. The second option is that of reunification, with an attachment of Northern Ireland to the Republic of Ireland, of which we find the so-called “nationalist” supporters mainly among Catholics. At present, the opinion polls and polls carried out among the Irish (from the North and the Republic) do not allow us to lean one way or the other. But one thing is certain: both options require a long period of 10 to 15 years in order to be “viable” and “efficient”, if only in strictly economic terms. . The weakness of investment – in physical and human capital, in infrastructure – is the Achilles heel of the Northern Irish economy, whether or not it is reunified: it is only by allocating financial resources (especially public but not only) and by securing the economic environment for businesses that Northern Ireland will return to growth and private employment. As we know, investment takes time for it to bear fruit. Assessments show that, on the current economic basis, a reunification of Ireland aimed at maintaining the standard of living of Northern Irish people would result in significant transfers from the Republic of Ireland, which citizens would experience. a drop in living standards of 5 to 10% (1).

A renewed solidarity will have to be expressed

It is difficult to imagine the Irish in the current Republic agreeing to make such transfers which risk being perpetuated in the absence of an ambitious investment policy. And it is difficult to imagine why the Northern Irish would accept, at least in the first iteration, a reunification that would degrade their standard of living by 15 to 20%. The space is therefore tight, especially for the Northern Irish, whose Brexit risks further degrading the economy by the changes in trade flows and the drop in financial transfers from the European Union that it entails. The United Kingdom also has a role to play in the amount and nature of the financial flows it wishes to continue to allocate to Northern Ireland.

Whatever option is chosen, renewed solidarity will have to be expressed. In this context, the evolution of the demographic weight of religious communities cannot be neglected. As such, the result of the March 2021 census, which will be known in the coming months, could be decisive, especially if it confirms that the demographic advantage in Northern Ireland is now in favor of the Catholic community and no longer Protestant (2 ) …

(1) See, for example, FitzGerald and Morgenroth (2019): The Northern Ireland Economy. Problems and Prospects, Trinity Economic Papers, No. 0619. The other evaluations are in the same order of magnitude.

(2) The last census in Northern Ireland, dated 21 March 2021 and which took place every ten years, will have to confirm the trends observed recently among the working population where, in 2016, 44% of the people were Catholic and 40 % Protestant. Among the most schoolchildren, the gap is even more marked where we find 51% of Catholics and 37% of Protestants. It is only among those over 60 that Protestants are still in the majority (57% against 35% for Catholics).

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