Northern Ireland

NI economic cost of UK exit from EU estimated at £1bn a year

Leaving the European Union could cost the Northern Ireland economy almost £1bn a year.

The research was carried out for the Assembly's enterprise committee.

The committee asked Open University economist Leslie Budd to assess the potential impacts of a British exit from the European Union, so-called the 'Brexit'.

Dr Budd said economic output in Northern Ireland could be 3% lower as a result.

The most recent figures suggests the output of the Northern Ireland economy is £33bn a year.

A 3% fall would knock almost £1bn off that.

Dr Budd cautioned that estimating the economic consequences of 'Brexit' was complex and that making an assessment at a Northern Ireland level was even more challenging.

However, he said that transaction costs for cross border trade could "rise significantly" and "act as a disincentive" to economic co-operation.

He added that Northern Ireland would also become a less attractive location for emerging market companies which are looking for an entry route to EU markets.

Taken together, those two factors would undermine the logic of "harmonising corporation tax" with the Republic of Ireland.

Dr Budd also pointed to the £2.4bn of EU funding Northern Ireland received between 2007 and 2013.

He said the EU funding programme for 2014 to 2020 is "central to Northern Ireland economic and innovation strategies".

Dr Budd arrived at the 3% of economic output figure by adjusting existing forecasts of the impact of 'Brexit' on the UK economy.

He said: "If the median forecast for the impact on UK GDP from a Brexit is around 2% lower, then we could expect trend total GDP to be 3% lower in Northern Ireland."

However, he concludes that ultimately the impact would depend on what sort of exit deal the UK would negotiate with the EU.

That echoes a report by the Open Europe think tank, published earlier this week, which laid out four 'Brexit' scenarios.

They ranged from a worst-case situation where GDP falls by 2.2% to one where GDP rises by 1.6%.

The three most positive outlooks all depend on the UK maintaining a liberal labour market with significant levels of immigration.

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