Recently, for the first time, an attempt has been made to put a price tag on Irish unity. And, to put it mildly, the figure arrived at is enough to soften the ardour of even the most zealous united-Irelander.
The study was conducted by John FitzGerald and Edgar Morgenroth. Both are respected economists, but that’s not to say that their conclusions have not been hotly disputed to the point of being rubbished by some of their equally esteemed colleagues.
In round figures, the duo estimated that the cost of Irish unity would be €20 billion a year over the next 20 years, a grand total of €400 billion. To fund that cost, we in the Republic would be required to impose tax hikes of 25 percent, together with a cut in government expenditure. In other words, a level of austerity not experience here for the last half a century.
In arriving at the jaw-dropping cost of achieving the long-held aspiration of territorial unity, the study is based on two main planks. The first is the current annual subvention of some £10 billion paid annually by the UK treasury to running Northern Ireland. This represents the gap between what Northern Ireland spends and what it collects in tax revenue.
The other stumbling block is the very large disparity between welfare payments and public service pay in both jurisdictions. It stands to reason that, in the event of unity, incomes in the north would need to be adjusted upwards to be on a par with those enjoyed by the population of the south. At present, the standard unemployment rate in the Republic is three times higher than that payable in the north. The contributory pension level in the north is some 20 percent lower than it is in the south. Wage rates in the north are significantly lower than those in the south, reflected in the fact that GDP per capita in the north lags well behind the UK average.
Needless to say, the study and its findings have not met with universal acceptance. More zealous believers in the national cause have dismissed the report as no better than a back-of-an-envelope calculation; more measured voices have questioned many of the assumptions on which the findings are based. Not least of the criticisms is that, in a world of global turmoil, with so many unknowns, it is next to impossible to know what the world order will look like when the time comes to put national unity into practice.
And there are other more cogent arguments against the reliability of the report findings. The London subvention, for example, will be greatly reduced when, post unity, Belfast will have shed the military, defence and policing costs which it now carries. The UK might, as an act of goodwill, release Northern Ireland from its share of the UK national debt. And London might continue to pay the pension costs of Northern Ireland’s citizens from Treasury funds.
Maybe it would be too much to expect that a benign White House might, as a celebration of Irish unity, underwrite some of the financial implications, which would be the acid test of the efficacy of the annual shamrock bowl theatrics. Or the European Union, mindful of its obligation to the cause of peace in Ireland, might provide special funding to mark such a momentous event.
Many will see the study as jumping ahead of itself in assuming that absorbing the north into the south would mean the creation of a single unified administration. It won’t be that easy.
Whither or which, and regardless of the accuracy of the arithmetic, it means that the debate on unity has moved another step. There is nothing like economic reality to concentrate the mind.
OPINION: Talk is cheap, but Irish unity won’t be
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18.04.2024
Recently, for the first time, an attempt has been made to put a price tag on Irish unity. And, to put it mildly, the figure arrived at is enough to soften the ardour of even the most zealous united-Irelander.
The study was conducted by John FitzGerald and Edgar Morgenroth. Both are respected economists, but that’s not to say that their conclusions have not been hotly disputed to the point of being rubbished by some of their equally esteemed colleagues.
In round figures, the duo estimated that the cost of Irish unity would be €20 billion a year over the next 20 years, a grand total of €400 billion. To fund that cost, we in the Republic would be required to impose tax hikes of 25 percent, together with a cut in government expenditure. In other words, a level of austerity not experience here for the last half a century.
In arriving at the jaw-dropping cost of achieving the........
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