Yes, it will cost us an arm and a leg, but I would still vote for a united Ireland
THERE you have it. If we want a united Ireland, it’ll cost us €20billion extra per year for at least the next 20 years. So says a report published last week by two of our leading economic experts, Dr John FitzGerald and Professor Edgar Morgenroth.
To put this into perspective, total Irish Government spending in 2022 came to €107billion. Since the publication of the report, many have been out debunking the figures, not least Sinn Féin, whose TD Pádraig Mac Lochlainn argued that the actual cost would be a lot less than that.
He disputed the figure of €11billion, used in the report, for what the UK pays annually to run the North. He quoted another professor from DCU, John Doyle, who estimated the number was closer to €2.4billion per year.
Another expert in this area, the ESRI’s Professor Seamus McGuinness, talked about ‘wildly varying’ assumptions being used when it came to discussion on the cost of a united Ireland.
The authors of last week’s report maintain that, one way or the other, we in the Republic will have to pay much more tax to fund a united Ireland. And we will have to take a cut in our current living standards.
Substantial
Some observers suggest that, in the event of a united Ireland, the UK will be obliged to continue to pony up a substantial amount for a good few years afterwards to allow things to bed in.
FitzGerald and Morgenroth do not believe that it is realistic to expect this, in view of the possible knock-on precedent for, say, Scottish independence. And they reject any suggestion that other outside entities, such as the US or the EU, will come to our aid, mainly because of the fact that we are ‘now one of the richest countries in the world’.
So it looks as if we are on our own – North and South – when it comes to a united Ireland. We’ll have to pay for it ourselves.
One thing most economists agree on is that the main problem lies north of the border, in that its economic productivity is way behind that of the Republic. Dr FitzGerald and Prof. Morgenroth specifically refer to how the education system in the North has to be reformed if it is to catch up with the South. They said the NI education system ‘discriminates against kids from workingclass backgrounds, Catholic and Protestant’, adding: ‘They leave school early, and this has a big impact on productivity’.
Referring to the enlightened decision made in the Republic in 1967 to provide free education for all, it is clear that they believe that something similar needs to be done in the North. But even if that was done today, it would take decades for the benefits to be achieved in terms of increased economic productivity. Right across the NI economy, major structural reforms would have to take place in order for it to operate on a level playing field to the Republic.
Some will say that it’s not so long ago that the shoe was on the other foot, that the North was the promised land compared to us. Indeed, when I was growing up in the border area, we used to look enviously across at the North to see how well they were doing. It had immaculate public services, especially the roads. How things have changed in a relatively short period. The North was being economically propped up by the huge amount of money from Westminster, and in a united Ireland this would not be available in the long term.
Those who say that the overall costs of reunification will not be as significant as are being suggested maintain that the economic situation could similarly change over a relatively short period, and point to the fact that NI can really benefit from the best-of-both-worlds concession it got from the EU after Brexit: equal trading access to the UK and the EU.
This point on how things can change so relatively quickly was put to Dr FitzGerald during his interview on Thursday on RTÉ’s Today With Claire Byrne. Over 50 years ago, his father, the late Garret FitzGerald, produced a document, Towards A New Ireland, which looked at the challenges facing the island at that time, if we were to unite. The elder FitzGerald said that it would be ‘economically impossible’ for the Republic to pay for a united Ireland because the North was so much better off than us.
When his parent’s views were put to Dr John FitzGerald, he said that his father ‘suffered from optimism bias’, and that the elder man’s opinion then was similar to that of Sinn Féin’s today: that both parts of the island would see stronger growth in a united Ireland than if both parts stayed apart. Dr John FitzGerald is not so gung-ho as his father was. He and his colleague have shown that the shoe is on the other foot, in that the Republic would be required to pay a huge amount of money to bring the North up to our economic position.
Critics of this report say it is far too pessimistic. If one were to skim over the headlines, this is true. The authors even maintain that their figures are not a ‘worstcase scenario’, in that they did not include a wide range of ancillary costs, but that they based their findings on high level assumptions. They did not include so-called ‘trivial things’, such as amending road signage.
I’m acutely aware of the difficulties surrounding wage and tax disparities between people who work on one side of the border, and live on the other. For instance, InterTrade Ireland, one of the cross-border bodies established under the Good Friday Agreement, set up its offices in Newry. It took years, and a lot of negotiations, to make sure that its staff, who came from both sides of the border, were treated equally.
Regret
We have a precedent to look to for assistance on the question of the cost of reunification. In the early 1990s, West Germans were told that it would cost about €50billion annually for the first couple of years. Quickly it became clear that this was an extremely optimistic estimate. Overall, between 1990 and 2014, the total cost was estimated to be about €2trillion. Did the Germans regret their decision to unite? Most surveys in Germany since suggest that, despite the high cost, it was justified. While there may initially have been a drop in the overall standard of living in both parts of Germany, ultimately, reunification has been good for the combined populations.
No matter what economist we believe, we can take it that, one way or the other, a united Ireland will cost a huge amount of money. So are we prepared to pay for the widely held aspiration of a united Ireland? If given an opportunity in a referendum on the subject, I would vote in favour of reunification. I would do so as someone living all my life, through good times and bad, in the shadow of the border, whose natural hinterland has been hived off elsewhere. And who, from my political experience, could see how artificial the differences are between people on both sides. And how it makes no economic or societal sense to have separate entities operating on this small island.
While I don’t need convincing, there are many other people who need to be persuaded.
While many have found fault with this recent report, it has provided excellent food for thought. It is a salutary reminder that before we hold a referendum on a united Ireland, each citizen North and South must have the full facts in their possession before they go to the polling booth. Much more analysis and planning is required.