Protocol has helped Northern Ireland ‘but boost may be only temporary’, according to report

The NI protocol has helped the region slightly outperform the UK average economically, but the benefits will be temporary without further investment, a report said.

But the report also paints a much “murkier picture” of previously reported employment figures in Northern Ireland, which are expected to remain below pre-pandemic levels well into 2023.

While overall production of goods and services “slightly exceeded” the UK average, employment growth in Northern Ireland is well below, according to the National Institute for Economic and Social Research (NIESR) report, part of a study of the UK economy.

Overall, the authors forecast that the UK economy will enter recession in the third quarter of this year and remain so through the first quarter of 2023. Inflation is expected to peak at nearly 11% in the fourth quarter, but will recede to 3% a year later.

The NIESR report states: “The NI Protocol has helped Northern Ireland achieve higher GVA growth than if there had been no agreement.

“Nevertheless, these growth gains are mostly temporary and without further investment in the region, the rest of the UK will overtake Northern Ireland in GVA performance.

“While this paints a picture of Northern Ireland as a beneficiary of the EU’s single market and customs union, one should not lose sight of its performance in comparison to other booming regions of the UK.”

Post-pandemic growth in London and the south-east is nearly four times that of Northern Ireland, the report said.

It added: “As such, the NI protocol should be viewed as a temporary boost driven by the trade sector, but to translate this into long-term success, policymakers must focus on increasing productivity.”

The report does not directly address, or attempt and predict, the impact of the legislation, which overrides many elements of the protocol currently going through the chambers of Parliament.

Angela Keery, head of tax at Baker Tilly Mooney Moore, said the report was “welcome evidence of the positive impact the agreement is having across many sectors”.


Angela Keery, chief tax officer at Baker Tilly Mooney Moore

It is “a testament to the drive and ability of our business owners to adapt to circumstances, take advantage where they find it and keep doing their job,” added Ms. Keery.

However, she added: “The general uncertainty caused by the NI Protocol negotiations is dampening any opportunities presented by dual market access and we are ultimately missing an opportunity.

“Perhaps more worrying is the lack of economic projections of what will happen if steps are taken at this stage to overturn the protocol.

“After over 19 months of learning how to work under the current regime, any significant retreat certainly has the potential to have a very adverse impact on the economy.”

In a study accompanying the report, Queen’s University economist David Jordan warned of a lack of productivity that will hamper future growth.

While discussion of the economy has focused on the pandemic and the rising cost of living, alongside the record these issues have “obscured the importance of Northern Ireland’s ongoing problem of low productivity”. It is 17% below the UK average.

Underinvestment in research and development remains a persistent weakness, while the region’s infrastructure compares poorly to other regions and nations, writes Prof Jordan.

Otherwise, the region continues to have the worst employment profile of the UK nations and regions. Labor force revisions “paint a much grimmer picture of employment in Northern Ireland during the Covid-19 period”.

Headcount fell 7%, more than the previously reported 5%, and will still be 3% below Q4 2019 well into 2023. Protocol has helped Northern Ireland ‘but boost may be only temporary’, according to report

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