Unionist politicians in Northern Ireland are accusing Sinn Féin of funding a new report that claims that Ireland's economy would get a $40 billion (€35.6 billion) boost in the event of a united Ireland.
The report, “Modeling Irish Unification,” was published by KLC Consulting in Canada along with University of British Columbia academics, and claims that the reunification of Ireland could result in significant economic boosts on both sides of the border.
The independence of the study has been called into question by Unionist politicians, however, as they claim the research “has been bought and paid for by republicans,” through KLC, which is headquartered in San Francisco.
DUP MLA for East Antrim Gordon Lyons branded the research "Gerry Adams-style economics" claiming that “the agent for this organization also happens to be the head of Friends of Sinn Féin in San Francisco and its president is described as someone who has ‘worked diligently for the unification of Ireland.’”
“Such is Sinn Féin’s desperation for economic credibility that they have to resort to lauding reports commissioned by their own supporters,” he continued
The “Modeling Irish Unification” study, completed in Canada, is based on similar cases of country reunification such as that of Germany in the early 1990s and predictions for a post-partition Korea. The research is generally seen as the first major examination of the outcomes of economic reunification between the North and the Republic.
Launched in the Westbury Hotel in Dublin on Tuesday, March 22, three unification scenarios were set out by the report, with the most ambitious estimating a boost in all-island GDP of $40 billion (€35.6 billion) within the first eight years of reunification.
The study results add to the current debate on the economic impact, both north and south of the border, if the UK votes to leave the European Union in the June 23 referendum.
Contributor to the report Marc Noland suggests, “Northern Ireland is falling ever further behind the Republic in terms of economic development.” He added that this could become increasingly problematic if the “Brexit” referendum is passed.
The economic models presented in the study include harmonization of the tax system, the reduction of trade barriers and the scrapping of transaction costs between Northern Ireland and the Republic, factoring in production, consumption, wages, price, exports and imports, and economic output factors. The scenarios were also presented on the basis of Northern Ireland taking on the Euro as its currency.
The greatest benefits would be felt in Northern Ireland, the study claims, where the removal of “currency, trade and tax barriers” would allow for long-term improvement in the North’s economy. The report also suggests that the North would greatly benefit from wage increases and from reduced administrative costs.
The study concludes that the post-unification North would see its exports initially rising by 5% and long-term GDP per capita increasing by 4%-7.5%.
The Republic of Ireland would also benefit from reunification, however, with barrier free access to the Northern Ireland market.
Speaking at the launch, Michael Burke, economic consultant and former Senior International Economist at Citibank in London stated, "We hear lots of reasons for or against Irish unification but very few of them focus on the economic debate."
"In my view – and I think it is substantiated by this very voluminous research – Irish unification is a growth story, is a success story, is a prosperity story, and that's why I very much welcome the report."
Dr Kurt Hubner, professor at the University of British Columbia and author of the study stated: “Our modeling exercise points to strong positive unification effects driven by successful currency devaluation and a policy dependent industrial turnaround.”
“While these effects occur in a static global economic environment, under ideal political conditions, they underline the potential of political and economic unification when it is supported by smart economic policy.”
Although the report suggests that political unification would ideally follow this economic unification, it is not completely necessary and the scenarios involved work on the basis of a seamless political reunification that would not be easily achieved in reality.
“Political unification outside of transition, however, is generally understood to be a more efficient form of government,” the report states.
“This is evident in theory that supports harmonization of functions of government, like tax collection, legal order, and tax-funded operations of political machinery.
“The removal of duplicate government services on the island would lead to greater efficiencies, synergies, and economy of scale savings.”
The difficulties faced by such a political reunification can be seen in the reaction of Unionist politicians when the study received its launch in Belfast Tuesday morning, however.
Steve Aiken, the UUP South Antrim Assembly candidate, slammed the report stating: “With respect to the Republic of Ireland, its economy is not comparable to the powerhouse that was West Germany [referencing the situations to which is was compared].”
“The notion that a United Ireland would see £25 billion [$40 billion] of economic gains if only the border was to be removed is fantasy economics of the highest order. It was a minister in the Republic, Jimmy Deenihan, who said ‘Ireland cannot afford a united Ireland.’”
DUP MLA Gordon Lyons also claimed that "support for the union has never been higher in Northern Ireland because people see the value of our NHS and being part of one of the world's largest economies, as well as many other positives of being in the United Kingdom."
These claims come despite the publishing of a further study yesterday, commissioned by the Stormont Department of Enterprise, Trade and Investment, which highlighted the risk to Northern Ireland if the UK pulls out of Europe. The report claims that the North’s strong links with the Republic mean that "Northern Ireland's economy is likely to be relatively more vulnerable to the type of structural changes triggered by a UK exit from the European Union in comparison to the rest of the UK".
The complete “Modeling Irish Unification” study can be read here.