Irish reunification would cost Dublin £17bn each year for two decades, study shows

A new report outlines the massive costs. Sinn Fein seems to imagine the British will pay them

A UNITED Ireland could cost Dublin more than £17billion every year for two decades, according to a new study, which has warned of an “immediate, major reduction” in Irish living standards if reunification happens.

Ireland would have to raise taxes by about 25 per cent and slash public spending to pay for Irish unity, if Northern Ireland left the United Kingdom after successful referendums on both sides of the border, the study found.

The report by the Institute of International and European Affairs said high costs would be incurred if Dublin immediately raised social security benefits and public sector wages in Northern Ireland, the poorest region of the UK, to match the rest of Ireland, which is predicted to have a £56.3billion budget surplus by 2027.

Prof John Fitzgerald said: “Even though Ireland has a much higher national income, funding the needs of the people of Northern Ireland in a united Ireland would put huge financial pressure on the people of Ireland, resulting in an immediate major reduction in their living standards.”

Prof Fitzgerald, one of the paper’s authors, likened the €20billion-a-year (£17 billion) bill to “a third of a bank bailout every year”. The bill would drop to £6.86 billion a year if the UK agreed to write off Northern Ireland’s share of the national debt and pay state pensions to people who made National Insurance contributions, the study said.

That was unlikely, the think tank said, because the UK Government would be wary of bolstering the case for Scottish independence, and Dublin would be at a negotiating disadvantage over the imperative to deliver unity after referendums in favour of reunification.

“Looking for somebody else to pay for unification is not going to happen. If it happens, we’ve got to pay for it ourselves,” Prof Fitzgerald told the broadcaster RTE yesterday.

Sinn Fein, which won the last Northern Ireland Assembly elections and has a commanding lead in the Irish polls before elections in the next 12 months, has called for votes on a united Ireland by 2030.

The Good Friday Agreement says the Secretary of State for Northern Ireland should call a border poll if it “appears likely” a majority would back unity.

The Government insists this condition has not been met. Recent polls show most Northern Irish voters want to remain in the UK, despite the debate over reunification being given fresh impetus by Brexit, which most in the region opposed.

Yesterday brought yet another report on the potentially enormous costs of Irish unification, this time from a Dublin think tank, the Institute of International and European Affairs. Soberly titled Irish Northern Ireland Subvention. Possible Unification Effects, it was parodied in a headline on the Sluggerotoole.com website: “Reports estimate Irish Reunification to cost somewhere between 37 pence and 44 trillion pounds…”

But the authors, Professor Edgar Morgenroth and John Fitzgerald, are well-regarded economists. It is more than five decades since Fitzgerald’s father, Garret, (who would first become Taoiseach in 1981), also an economist, tried to introduce some reality to the debate with his book Towards a New Ireland, which confronted some of the challenges of unifying Ireland very early in the blood-soaked years of the Troubles.

He warned that tax levels would soar in the south to match the substantially higher public spending northerners were accustomed to. Now his son believes that it could cost as much as £20.5billion annually for two decades to give northerners the same welfare and public sector pay rates as the south.

Northern Ireland was impoverished by the destruction of the Troubles and the sectarian and political mistrust that continues in the aftermath. Many thousands of bright young people who left to escape violence never came home.

The Republic might be rich at the moment, but its buoyant economy has shallow roots and its vulnerability is underestimated. Few remember how close to disaster it came during and after the financial crisis that left the Celtic Tiger on life-support and the government taking orders from the International Monetary Fund and the European Union.

Ireland is an optimistic country and the harsh lessons appear to have been forgotten, but the economic statistics are being distorted by a reliance on multinational firms (which pay 80 per cent of corporation tax). With the United States and EU threatening the tax policies that so attracted them, the exit of these firms would cause immense damage.

The country is also facing big new spending pressures. The political conversations that dominate had been until recently about which lobbies should most benefit from the dispersal of national wealth, but now huge numbers of immigrants are occupying hotels and public buildings in small towns and sleeping in tents outside government buildings in cities.

Moreover, the recent rejection of the socially progressive but idiotic proposals to change the constitution shone a spotlight on the gap between the ordinary Pat or Maureen and the governing elite. Ireland is beginning to realise that it’s living beyond its means.

Which is why Sinn Fein, which sheds policies like a Persian cat in its anxiety to reassure middle-class voters that it is safe, is panic-stricken as it clings on to Irish unity – the only policy that matters to the Sinn Fein strategists, the IRA Army Council veterans who still rule the roost from the Belfast shadows.

Polls show that there is nothing near a majority in Northern Ireland for unity, and down south enthusiasm does not survive much scrutiny. “I don’t mind a united Ireland as long as it has no effect whatsoever on the 26 counties,” a taxi driver said to me more than a decade ago, and that still appears to be the attitude of the average southerner. They don’t want tax increases and they are reluctant to woo unionists even with a gesture like joining the Commonwealth. Extreme nationalists, the ones who actually care, resist reconciliation: they want subjugation.

So who should pay for unification, Sinn Fein – the eulogisers of the IRA who almost destroyed Northern Ireland – are now being asked. The late Gerry Fitt, the leader of constitutional nationalism – who with his family was driven out of Belfast by IRA supporters in the early 1980s and became a stalwart in the House of Lords – explained Sinn Fein policy as an instruction to the British “to f--- off and leave your wallet on the mantelpiece”.

The hapless Pádraig Mac Lochlainn, now Sinn Fein’s chief whip, was sent out to man the media barricades yesterday. If people on both sides of the border voted for a united Ireland, he explained, “You have to assume that Britain will have, and indeed would, step up. To take financial responsibility, moving forward.” The Brits might have something to say about that.