Windsor Framework: Economist queries Stormont minister on claims about 'dual market access' benefits

Dr Esmond Birnie also says Stormont is not considering the £150m annual cost to taxpayers of managing the arrangements, because it isn’t coming out of the Executive’s budget.

Since the Irish Sea border arrangements were devised and revised, there have been repeated claims that the local economy stands to benefit from an economic boom – fuelled by “dual market access”. Former PM Rishi Sunak claimed the Windsor Framework creates the world’s most exciting economic zone – and US President Joe Biden said investors could ‘triple’ their investment in Northern Ireland.

Invest NI – the body charged with securing foreign direct investment (FDI) has refused to release Windsor Framework FDI data, claiming it could lead to 'disparaging comments' and damage the economy.

Northern Ireland can sell goods into both the EU (because it is part of the EU goods market) and Great Britain. However, supply chains from Great Britain have been massively disrupted by the Irish Sea border. Some experts believe up to 60% of movements into NI from the mainland are deemed ‘at risk’ and subject to full EU customs checks – with no restrictions on EU trade.

Speaking to the BBC on Thursday, Stormont’s economy minister said that Invest NI had “reported very significant interest in conversations” from foreign investors – and that dual market access is “improving the picture” in manufacturing exports.

However, Dr Esmond Birnie, Senior Economist at Ulster University, says any economic gains should already be visible – and that recent figures showed a fall in the number of foreign direct investment projects coming into NI.

He also rejected a claim by the minister that Northern Ireland is, overall, growing more quickly than Great Britain. Dr Birnie said that during the period the Protocol has been in effect, NI has grown more slowly than the UK average, about 10% compared to about 12%.

Northern Ireland’s economy grew by 0.4% in the second quarter of this year – slower than the 0.6% UK average. There has been growth in the services sector and construction – but retail and manufacturing have struggled. Conor Murphy said the retail sector is being impacted by online sales, and manufacturing is subject to global inflationary pressures.

Asked why Northern Ireland is not benefitting from the so-called dual market access in the way it was suggested it would, Mr Murphy said: “Our export manufacturing is up almost 7% – which is a significant growth over the course of last year. That does suggest that dual market access is improving the picture there. There are certain sectors of manufacturing that are reliant on international markets, on high capital cost goods that undoubtedly are struggling… that market is slowing down internationally” he said.

“We’ve had the position of dual market access mapped out more clearly now for just about a year. Invest NI… have been putting the proposition of what dual market access looks like, both internationally in terms of potential investors, but also to our local companies to get them more into the export phase”, he said.

Asked by the BBC’s Mark Carruthers about why Northern Ireland isn’t doing better given the growth – by a third – of the services sector since the pandemic, and former PM Rishi Sunak’s description of Northern Ireland as the “world’s most exciting economic zone” – the minister claimed it would be 2025 before dual market access is fully implemented.

He said there is a “very strong level of interest” from foreign investors in Northern Ireland – and Invest NI had “reported very significant interest in conversations with them around this area”.

Esmond Birnie, Senior Economist (Economic Research) at Ulster University said “The Minister was at pains to stress there will be gains from NI’s Dual Market Access under the Protocol/WF although he did seem to be implying that in might be too early to see such gains on the ground. In fact, many of the terms of the Protocol have applied since January 2021 so we probably should expect to see some impact already.

“Whereas the Minister alluded to a strong level of interest in the US in investing in NI, the performance so far in terms of actual inward investment projects has been disappointing. The most up to date information (from the business services Big 4 company EY) shows the number of foreign direct investment projects coming into NI in 2023 was lower than in 2022. Earlier EY data also showed that since the Protocol came into effect NI’s share of all the inward investment projects in manufacturing coming into the UK has declined. (The opposite of what might have been expected if dual market access was a really big draw)”.

He added that “a considerable amount of taxpayers money, about £150m annually, has been used to try to mitigate/administer the NI Brexit trading arrangements (to fund the Trader Support Service for example). Perhaps the view is that only money which has to spent by the NI Executive matters but that £150m is a very real economic cost”.