Is the protocol costing the Northern Irish economy £2.5m a day?

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DUP LEADER JEFFREY Donaldson has claimed that the Northern Ireland Protocol is costing the Northern Irish economy £2.5million per day, or £100,000 per hour (about 118,000 euros).

Following the resignation of Northern Ireland Prime Minister and Donaldson’s party colleague, Paul Givan, last week, Donaldson has repeatedly made that claim.

The Northern Ireland Protocol was one of the key elements of the Brexit Withdrawal Agreement which legally allowed the UK to leave the European Union (EU). The protocol keeps Northern Ireland within the EU’s single market for goods. It allows goods to move freely between Ireland and Northern Ireland and removes the threat of a hard border.

However, products from Britain now face additional costs in terms of new processes and paperwork, as they have to be checked at ports to ensure they comply with EU laws.

Requirement

The claim we are looking at is that the Northern Ireland protocol is costing the Northern Irish economy £2.5m per day, or £100,000 per hour.

Speaking directly after Givan’s resignation last week, Donaldson gave a speech in which he made claims.

“In the 217 days that I have been leader of this party, Northern Ireland Protocol has cost our economy £535m. That’s £2.5m every day and more than £100,000 every hour, he said.

“It really begs the question: why are other parties sitting idly by while our economy is taking damage to the tune of £100,000 every hour?”

Donaldson made the request again this week, citing the £2.5m figure during a speech at Dromore in County Down.

The proof

It is not immediately clear where Donaldson’s numbers come from; The newspaper contacted the Democratic Unionist Party to request evidence to verify the claim, but no response had been received at the time of publication.

The figure has been quoted several times in Northern Ireland, but the precise source of the claim is not known.

However, an NI Brexit scholar who spoke to The newspaper said it could be based on a calculation by Dr Esmond Birnie, senior economist at the University of Ulster.

In August 2021, Birnie released an editorial in The News Letter in which he estimated the protocol was costing Northern Ireland £850m a year.

When broken down, that works out to £70.8m per month, £17.7m per week, £2.5m per day and around £104,000 per hour.

Birnie’s figures were calculated using a limited dataset based on the experience of four companies, including extrapolation of figures from Marks and Spencers financial accounts. He does not specify why he chose to use this methodology.

Based on the experience of these companies, he felt that all businesses in Northern Ireland have faced a 6% increase in the cost of bringing goods into NI from Britain.

“Given that the total flow of goods and materials into NI from Britain is around £10 billion, the increased costs equate to a bill of around £600 million a year” , Birnie said.

Birnie went on to say that the money Westminster is spending to help businesses that have been affected by the protocol – around £250million every year, he says – is a cost to Northern Ireland.

Adding what he claimed was the annual cost to business and the annual cost of spending Westminster together – £600m plus £250m – he arrived at the sum total of £850m.

He felt Westminster’s £250million in spending was an opportunity cost, or money that can no longer be spent on health or education.

However, it is important to stress that there is no evidence to suggest that this money would be spent on health and education in Northern Ireland if it was not spent on the protocol.

The UK government hasn’t indicated it will, and there’s no way to tell whether or not it will.

Removing the £250million from the equation – because it’s not a cost Northern Ireland’s businesses or economy have to pay – leaves £600million. That means there’s still £65m between Birnie’s estimate and the £535m figure quoted by Donaldson.

The newspaper has contacted the DUP to clarify the discrepancy, but has not received a response as of press time.

Currently, there is no official data available for NI-GB trade since 2020. Information is collected on an annual basis by the Northern Ireland Statistics and Research Agency (NISRA).

A NISRA spokesman said The newspaper“NISRA will release 2020 import data (including UK purchases) at the end of March which will include a breakdown of sales and purchases by goods and services, but does not have the information to show the cost of the protocol.”

Birnie’s extrapolation of figures based on the experiences of four companies is unreliable, as it is a selective sample of a fraction of companies in the North. There are no official figures available to show the true cost of the protocol on Northern Ireland’s economy.

The estimate is based on assumptions and will eventually be tested over time by actual economic results.

Missing context

Furthermore, Birnie’s estimate lacks context as it fails to recognize that Northern Irish companies now have an advantage over UK exporters as they still have full access to the EU single market and the rest from the United Kingdom.

It also does not take into account the other costs of Brexit, such as labor shortages, nor does it calculate the potential offsetting impact of Northern Ireland’s trade with the Republic or the Republic. EU, which according to the data has improved under the protocol.

According to Central Bureau of Statistics (CSO), imports from Northern Ireland to the Republic in the first eleven months of 2021 increased by 64% to €3,679 million compared to January to November 2020.

Exports to Northern Ireland from the Republic amounted to €3,305 million over the period January to November 2021, an increase of 48% over the same period in 2020.

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Both of these show a positive impact on business in Northern Ireland, which was not factored into Birnie’s estimate.

Other approaches

Using a qualitative approach to examine the impact directly on NI’s business, to research conducted by Manufacturing Northern Ireland, which received 163 responses from NI-based manufacturers, suggested that companies north of the border are happy to increasingly engage with EU suppliers.

When asked to rank the biggest challenges facing their business right now, nearly 60% of manufacturers said access to labor was their biggest issue. Four in five said it was their first or second worst problem.

Nearly two-thirds of manufacturers surveyed said the protocol was their least difficult issue, with fewer than one in seven saying it was their biggest challenge.

Screenshot (4)

Source: Manufacturing Northern Ireland

Fewer than one in four said they continue to struggle with the new requirements in the Irish Sea. This is a significant drop from 41.3% in the July 2021 survey. More than two-thirds said they had experienced no impact, were aware of the issues or saw them being resolved soon.

Although there has been an increase in the number of companies saying business is business as usual, one in five companies have consistently said that their suppliers in Britain “are unwilling to engage in Irish Sea formalities”.

After the first year, more than 65% of businesses now say they are continuing to work as usual with their EU suppliers, up from 45% in April and just over half in July.

Verdict

Jeffrey Donaldson claimed that the NI protocol costs Northern Ireland’s economy £535 million every year, £2.5 million per day and £100,000 per hour.

The figures quoted appear to be based on a rough estimate, and there is no data available to prove whether they are true or false.

The estimate used a small sample of select businesses and did not consider several factors to arrive at the £850m figure, including data which suggests there has been a more positive impact on businesses in Northern Ireland.

Even though this is the figure used by Donaldson, there remains a discrepancy between the figure he quoted and the estimate, which The newspaper could not realize. The Democratic Unionist Party did not respond to comments when asked about it.

Therefore, we assess this claim: NOT PROVEN.

According to our verdict guide, this means that the available evidence is insufficient to support or disprove the allegation, but it is logically possible.

TheJournal’s FactCheck is a signatory to the International Fact-Checking Network Code of Principles. You can read it here. For more information on how FactCheck works, what verdicts mean, and how you can participate, see our Reader’s Guide here. You can learn more about the team of editors and reporters who work on fact checks here.

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