Unity advocates query research that forecasts cost of absorbing the north could reach £17bn a year

Authors say costs of integration could eventually be offset by the benefits of unity

The debate around Irish unity is likely to intensify the longer the devolved institutions are suspended
The analysis by the Institute of International and European Affairs (IIEA) looks at how much the north would need to be subsidised in the event of Irish unity

Advocates of Irish unity have played down research that claims merging Northern Ireland into a new 32-county state could lead to plummeting living standards.

The analysis by the Institute of International and European Affairs (IIEA) says uniting Ireland will cost at least €8bn (£6.86bn) annually and could potentially increase to €20bn (£17.15bn) a year.

The report looks at how much the north would need to be subsidised in the event of Irish unity.

Professor John Fitzgerald, one of the report’s two authors, said the cost of absorbing the north into a new Ireland state would put pressure on public finances and likely lead to an “immediate, major reduction” in living standards.

The analysis, co-authored with Professor Edgar Morgenroth, suggests the cost of unification could be substantially reduced if significant changes were made to the structure of the north’s economy that would raise its productivity.

Professor John Fitzgerald

Prof Morgenroth said some of the costs of integration would eventually be offset by the benefits of unity but that this would take “some considerable time”.

The report is based on the subvention for the north in 2019.

Its subvention estimate for maintaining public services at current levels is almost €11bn (£9.4bn) a year.

Prof FitzGerald said: “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.”

Prof Morgenroth said: “Given the very detailed integration of the Northern Ireland economy into that of the UK, separating the two economies, as would occur under a united Ireland, would involve major costs for Northern Ireland.

“While some of these costs would eventually be offset by the wider benefits of integration into the wider EU economy, this would take some considerable time. Also, under the Windsor Framework, Northern Ireland currently enjoys some of the benefits of EU membership insofar as it affects goods produced in Northern Ireland.”

However, an economics expert has dismissed the report’s findings, claiming the authors have presented a “static” analysis on the size of the northern subvention.

Dr Séamus McGuinness, resesearch professor at ESRI Dublin, said that the analysis ignored “fundamental facts” that subvention exists because the northern economy has very low productivity but that “low productivity is not set in stone and can be changed with proper policy and investment”.

“This mini-industry of estimating subvention, which seems to assume it is a constant that will apply immediately following a border poll, really makes no sense in terms of the reality of how a transition around constitutional change has to happen and has to be managed and planned for,” he told the Irish Examiner.

Sinn Féin Finance Minister Caoimhe Archibald said other research had indicated that Irish unity could boost the all-island economy and that the current priority should be “planning and preparation”.

“Economic performance in the north has suffered enormously as a result of partition and more recently the negative impact of Brexit,” she said.

“Reunification would best serve Ireland’s economic interests and would deliver economic and social benefits for the whole island.”

SDLP leader Colum Eastwood said the larger estimates put forward in the report were “based on assumptions that the UK government will jettison its responsibility on pension liabilities while maintaining a claim on national debt repayment at the point of departure”.

“Those conditions are a matter for negotiation and I am unconvinced that either will actually represent the final position,” he said.

The Foyle MP described the IIEA report as “another important contribution to the debate about the future of our island”.

“And while there are differing estimates on the scale of subvention, it is important that we have as wide an evidence base as possible so that, unlike the Brexit referendum, people can have confidence in the proposition that will eventually be put to them,” he said.

Ireland’s Future CEO Gerry Carlile said the report was a “another contribution to the intensifying discussions on a united Ireland”.

“However, the content of the report resides within a stagnant worst-case scenario when the picture is far more dynamic,” he said.

He said the report made a number of assumptions, including that defence expenditure would remain constant, with spending on a NATO membership and a nuclear programme.

“It assumes repayment of UK national debts, which will not apply; it assumes that the UK will walk away from pension responsibilities, which whilst possible, few would expect it to,” he said.

“And most importantly it assumes a lack of growth when all indicators are that the north suffers from economic stagnation directly and uniquely as a result of being tied to London and unification offers the singular most important impetus to economic growth for the north.”