Study: Irish economies 'growing closer' since Brexit

A new study of trade between Northern Ireland and its land neighbor, the Republic of Ireland, shows it has grown in economic importance since Brexit.

Northern Ireland is politically part of the United Kingdom, but geographically separate from Great Britain because it is on the island of Ireland, and consequently is the only part of the UK to share a land frontier with a European Union member state.

The trading status of Northern Ireland following the UK's exit from the EU after a referendum seven years ago has proved to be a very complicated and politically contentious issue, with the province remaining subject to some EU regulations in order to avoid the introduction of a hard border between Northern Ireland and the Republic of Ireland.

A new study by the Dublin-based Economic and Social Research Institute, or ESRI, has revealed that, contrary to previous findings, cross-border trade has become more economically significant since Brexit.

"Goods trade between Ireland and Northern Ireland has grown substantially since Brexit," the report said. "International trade is strongly linked to better overall economic performance, particularly in relatively smaller countries where the size of the domestic market may limit the ability of firms to achieve economies of scale."

The study highlighted the close integration of the two economies and added that "this is in contrast to previous research findings on this topic, which showed cross-border trade below levels predicted by similar models, with the different effect likely arising from the sharp increase in cross-border trade since Brexit".

The initial post-Brexit arrangement, known as the Northern Ireland Protocol, was widely criticized, despite having been hailed by then-prime minister Boris Johnson's negotiating team as a great achievement when it was agreed as part of the Brexit negotiations.

It has now been replaced by Prime Minister Rishi Sunak's Windsor Framework, agreed earlier this year, but which is still not universally popular.

When extolling its virtues in a speech in February, Sunak said: "Northern Ireland is in the unbelievably special position — unique position in the entire world, European continent — in having privileged access, not just to the UK home market, which is enormous... but also the EU single market."

Critics were swift to point out that this was what the whole of the UK had had before Brexit happened.

Fergal O'Brien, director of lobbying and influence at Ibec, Ireland's biggest business lobby group, said: "Business is increasingly aware of the growing opportunities in the all-island economy. The ESRI research demonstrates the pace of this trade growth in recent years and the importance of trade with the EU for Northern Ireland businesses.

"The research will inform a better understanding of the overall functioning of the all-island economy and also support development of the all-island macroeconomic model, which the research program will ultimately deliver."