Queens Uni economist says unity ‘not economically feasible’
A Queens University Belfast economist has said it could take decades for private sector growth in Northern Ireland to reach a level that would make a united Ireland economically viable.
Minister Jimmy Deenihan on RTE/BBC programme agrees that Irish government currently cannot afford a United Ireland
Mr Doherty was speaking on a joint RTE/BBC programme, Ireland’s Call, on Wednesday night about attitudes on both sides of the border to a united Ireland.
“In my heart and in my head a united Ireland makes sense,” Mr Doherty said during a panel discussion.
“Get rid of two currencies, two exchange rates; get rid of two employment laws and you will have a better, stronger economy,” he said.
The Sinn Fein finance spokesman also said that combining “two health services and two transport systems” would generate the tax revenues needed to cover the costs of unification.
He cited the example of the reunification of Germany.
Mr Doherty disputed Arlene Foster, the Stormont finance minister, when she said that the North received £9.8 billion (€13.8 billion) a year from the British government. He said that Northern Ireland cost the British taxpayer £17.7 billion every year but collected £14.1 billion in taxes, meaning the yearly subvention was £3.6 billion (€5 billion).
Dr Brownlow said that it was very hard to calculate the exact transfer from London to Belfast every year, but that all the evidence suggested that it was very close to the £9.8 billion figure given by Ms Foster.
“Northern Ireland has low levels of productivity and high levels of economic inactivity. It has a very big public sector and a very weak private sector. It also has one of the biggest transfers to any region within the United Kingdom.”
“I can see why Pearse Doherty would want to argue that it is a much lower figure. There are a lot less taxpayers in the Republic than there are in Britain and they would have to pay for this transfer in a united Ireland.”
In a survey for the RTE/BBC programme, 66 per cent of people in the Republic favoured unification during their lifetime, but this figure fell to 31 per cent if they would have to pay more taxes.
Dr Brownlow said there was very little evidence to support Mr Doherty’s claim that a united Irish economy would create huge synergies and economies of scale that would cover the costs of unification. “Northern Ireland is already part of an economy with 60 million people, so if the argument is scale, then it would make more sense for Ireland to join the UK.”
He said there was very little economic theory on the impact of reunification, but that in the case of Germany, which is much richer than Ireland, it took 15 years after east and west merged in 1990 and a painful process of reforms before the economy attained sustainable levels of growth.
Northern Ireland received its first grant from London in 1938, and this subsidy has limited private sector growth.
“That is effectively our budget deficit. That is the difference between tax and spending. In the south when you have a budget deficit you either raise taxes or cut spending. When you don’t have to do that the economy is slow to change,” Dr Brownlow said.
He said that this was why it could take decades for private sector activity in the North to reach a level that would generate the tax receipts for the state to be able to balance its books without help from London.
It was only in this scenario, he said, that an economically viable united Ireland could be contemplated.
“There is one crucial aspect of unification that Mr Doherty does not address and that is the question of national identity,” Dr Brownlow also said. “How do you compensate Ulster unionists for the loss of their identity, which has a value? They are not going to agree to a united Ireland for an extra £500 per person, they probably wouldn’t do it for an extra £5,000 per person. That cannot be captured by economic calculations.”
Watch the whole programme here: www.bbc.co.uk