The financial impact of partition

An examination of the economics of a divided Ireland by David McWilliams (davidmcwilliams.ie)

Are you a real Trekkie? If so, you’ll know the answer to the following question: which was the only episode of Star Trek ever banned in Ireland and Britain - and why?

Star Trek is many things, but is it really so incendiary as to be worthy of censorship?

The twelfth episode in the third series of Star Trek: The Next Generation was banned in this part of the world and never shown on terrestrial television in Britain or Ireland. That’s because in that episode Commander Data, musing on terrorism in the year 2364, noted that Ireland had been reunited in 2024.

This episode was due to be aired here and in Britain in 1990 but was pulled by the censors in both jurisdictions.

The question is whether Commander Data’s time horizon is right? And if it is even out by a decade or two, could the Irish economy support the North?

I say “support” because the Northern economy is incapable of supporting itself. If Northern Ireland were asked to pay for itself tomorrow, its budget deficit would be close to 20 per cent of GDP simply to keep the lights on. It has become a type of concubine economy, living off the largesse of Westminster and the home counties.

The easiest way to assess the impact of the Union on the Northern economy is to compare the economies of the North and the South. In fact, the border gives us a lovely economic experiment. Take two systems in one country and examine the results; a bit like West Germany versus East Germany or, God forbid, North Korea versus South Korea.

A cursory glance at the performance of the Northern Irish economy since 1922 suggests that the Union has been an economic disaster for all the people of Northern Ireland, Protestant and Catholic, Unionist and Nationalist. They’ve all been impoverished by the Union and this shows no sign of letting up.

If we go back to 1920, 80 per cent of the industrial output of the entire island of Ireland came from the three counties around Belfast. It was an industrial region with northern entrepreneurs and inventors at the forefront of industrial innovation.

By 1911, Belfast was the biggest city in Ireland, with a population of close to 400,000. In the 50 years up to the creation of Northern Ireland, Belfast was the fastest growing city in all of these islands. And in 1920 it was by far the richest part of the island.

In contrast, the rest of the Irish economy was agricultural and backward and the only manufacturing we had could be termed a ‘beer and biscuits economy’, dominated by the likes of Guinness and Jacobs.

Fast forward to now and we see the shocking collapse of the once-dynamic Northern economy versus that of the Republic. Having been a fraction of the North’s at independence, the Republic’s industrial output is now ten times greater than that of Northern Ireland. Exports from the Republic are 89 billion euro while from the North, exports are a paltry 6 billion euro. This obviously reflects multinationals, but it also underscores just how far ahead is the Republic’s industrial base.

Producing 15 times more exports underscores a vast difference in terms of the globalisation of business.

The total size of the Republic’s economy is now four times that of the North, even though the labour force is not even two-and-a-half times bigger.

In terms of income per head, the Republic is now almost twice as rich per person as the North. The average income per head in the Republic is 39,873 euro, while it languishes at 23,700 euro up north.

While we will have to come up with new figures to get a true picture of national income, the end figure is likely to tell a similar story.

The differing fortunes of North and South can be easily seen in the fact that, having been smaller than Belfast at the time of partition, the population of the greater Dublin area is now almost three times bigger than the greater Belfast metropolitan region.

Obviously there are significant differences in terms of prices, access to public services and housing between the two parts of the island. But the fact remains that the Union has been an economic calamity for everyone in the North. Think about that figure of the North having to borrow 20 per cent of GDP every year just to maintain today’s living standards. If the North were asked to pay for itself tomorrow, living standards would plummet. In contrast, the Republic should have a balanced budget by 2018.

The comparison between both jurisdictions is made more significant by the fact that economically the North was, at one stage, so far ahead of the South. So where does that leave us?

Well, in the distant past, there was good reason to believe that the Union preserved living standards in the North, but this is a myth and has not been the case since 1990 - the year Star Trek was banned. Indeed, the end of the Troubles, which should have marked the resurgence of the relative performance of the North, has actually delivered the opposite.

Relative to the South, the Northern economy has fallen backwards since the guns were silenced. If there was an economic peace dividend, it went south.

All the while, the demographic forces are on the side of nationalism.

As I write, I am looking at demographics in Northern Ireland from the 2011 census.

The most interesting statistic shows the proportion of Catholics and Protestants in various age groups. Of the elderly, (those over 90) in the North, 64 per cent are Protestant and 25 per cent are Catholic. A total of 9 per cent had no declared religion.

But when you look at children born since 2008, the picture changes dramatically. This corresponding figure is 31 per cent Protestant and 44 per cent Catholic.

In one (admittedly very long) lifetime, the Catholic population in the youngest cohort has nearly doubled, while the Protestant cohort has more than halved.

The numbers don’t lie. The question is whether Ireland wants the North.

Conor Cruse O’Brien noted that the Unionists’ last battle will not be with Irish nationalists but will be with English nationalists.

Could it also be that the Northern nationalists’ last battle will not be with the British, but with Southern public opinion?

Wouldn’t it be strange if Commander Data was partially right after all? Then again, that was science fiction, wasn’t it?

Urgent Appeal