United Ireland would cost €20 billion for 20 years, new study finds

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A new report has estimated that the reunification of Ireland would cost around €20 billion a year for two decades. 

Findings from the Dublin-based Institute of International and European Affairs (IIEA) take into account the current level of funding Northern Ireland receives from the UK government. 

They also include the share of UK national debt it would presumably carry were it to join a united Ireland as well as its economy’s markedly low productivity relative to the Republic of Ireland.

Northern Ireland’s public services currently rely heavily on a “subvention” of some €11 billion from the UK, which in the event of unification would need to be replaced by funding from Dublin. 

According to the IIEA, the resulting spend would be equivalent to 10% of Ireland’s Gross National Income, 40% of which is currently spent on public services.

“This is a huge sum as total government expenditure in Ireland currently amounts to around 40% of GNI,” the researchers write. “This would add a quarter to public expenditure in Ireland, while producing a very limited increase in revenue.

“To deal with the resulting deficit, which under the most favourable circumstances would persist for many years after unification, there would have to be a dramatic increase in taxation and/or a major reduction in expenditure.”

In their conclusions, the authors recommend Northern Ireland – which remains relatively poor and heavily reliant on public sector spending and employment – embark on major reforms to improve its residents’ standard of living.

“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,” the report says.

“If, instead, Northern Ireland made major changes in its economy designed to dramatically raise productivity, over time this would narrow the gap in living standards between Northern Ireland, the rest of the UK and Ireland.

“In turn, this would reduce the Northern Ireland deficit and also reduce the cost of applying similar standards in Northern Ireland to those in Ireland. This could substantially reduce the cost of unification.” 

The politics of Northern Ireland have been under particular stress in recent years, not least thanks to the implications and handling of Brexit.

While a deal between Dublin and London was able to resolve some of the main trade issues resulting from the UK’s departure from the EU, unionist parties have at times obstructed efforts to ensure frictionless trade across the Anglo-Irish land border.

After the region’s most recent elections, Northern Ireland’s dominant pro-UK party, the Democratic Unionist Party, refused for months to participate in the regional government, essentially bringing the government in Belfast to a standstill.

Eventually, the party agreed to a deal that allowed Sinn Fein’s Michelle O’Neill to become First Minister, giving the nationalist party its first chance to lead the regional government.

Sinn Fein is widely expected to perform well in the Republic’s next parliamentary elections, likely to take place next year – raising the prospect that both the north and the republic could be led by explicitly pro-unification premiers.

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