Northern Ireland’s dual market access means little in the face of political turmoil

Ethan Haynes, Intern
15/11/2023

Britain’s exit from the European Union has been a rocky affair and Northern Ireland has undoubtedly faced the political brunt of 2016’s referendum. Dual market access places Northern Ireland in a unique economic position, but with Stormont still dissolved, the country’s political future still very much hangs in the balance. Despite recent investment and the theoretical advantages of dual market access, political instability continues to undermine the economic future of Northern Ireland.

Prime Minister Rishi Sunak stated (somewhat ironically) that Northern Ireland’s dual access places the country in an “unbelievably special position”. However, political instability risks undermining the unique economic opportunities of the Framework, as a recent poll suggests that 62% of DUP voters want the party to boycott Stormont until the Protocol is scrapped. With an estimated two-thirds of respondents to another recent poll backing the Windsor Framework, and a third of its opponents being mostly Unionists, the divide between Unionists and the rest of the country is becoming ever starker.

A recent Chamber of Commerce Survey presents mixed reviews, as businesses remain optimistic, but politics continues to undermine economic performance, with hiring and investment slowing while the cost of living and inflationary pressures rise.  The survey revealed that 44% of businesses are positive or very positive about the Windsor Framework’s impact, and 77% of businesses performing well or reasonably well. However, the same survey also reveals that 55% of current members are experiencing some level of a slowdown in demand. The greatest area of concern for Northern Ireland business owners is the “lack of an Executive” and inflationary pressures in addition to concerns about skills and supply chains. The economic challenges faced by many nations are only being compounded in Northern Ireland by the cloud of political instability.

Last month, US trade envoy Joe Kennedy III led a trip to Northern Ireland, consisting of current and potential American investors, with the BBC reporting that the New York State Pension fund is set to invest up to £41 million into the region's businesses. However, the political standstill cast a grey cloud over the business trip. Kennedy made clear that “if you are talking about making investments in the billions of dollars you need to have that political stability”. Such investments are largely hypothetical unless you count the €1.14bn PEACEPLUS fund, an EU programme designed to support peace and prosperity across Northern Ireland and the border counties of Ireland, announced back in September.

Yet, the importance of American FDI cannot be underestimated. In the last two decades, a third of all FDI investment and 51% of jobs created has been as a result of American investment into Northern Ireland.  The US trade envoy visit perfectly personified the problems that face Northern Ireland – a flourishing business environment and economic optimism consistently threatened by political instability.

Despite this, Kennedy acknowledged that the investor confidence was because of their unique economic position. Currently over 2,100 digital tech firms already operate throughout the country. The Irish Times has reported that investment into technology companies reached an all-time high of £139 million in 2022, reflecting a growing trend of venture capital investment to support the country’s growth plans. AI company Ocula Technologies has announced their new HQ located in Northern Ireland accompanied by a £11m investment into R&D; whilst Coca Cola and pharmaceutical company Almacexpand their current operations in Northern Ireland adding a total investment of £97 million and creating 585 jobs.

These investments point to a growing cohort of companies from a host of sectors that are recognising the potential gains of Northern Ireland having a foot in both camps, often increasing an established presence in the region.

These are undoubtedly positive signs for the future of Northern Ireland, with dual market access providing increasing economic opportunities. However, political certainty remains the key determinant for future investment, and the dissolved Executive and the DUP’s demands risk jeopardising this economic momentum. The UK Government hopes to make progress towards a much awaited ‘unblocking’ of government, as the Northern Ireland Secretary of State has recently stated that talks with the DUP to restore Stormont are in the ‘final stages’. Businesses and prospective investors, however, will need a lot more certainty if Northern Ireland is to continue to attract new ideas and companies to its shores.