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Esmond Birnie: Windsor Framework is not best of all worlds so the …

UK Prime Minister Rishi Sunak and EU Commission President Ursula von der Leyen unveil their deal at Windsor Guildhall on February 27. Esmond Birnie says that since then there has been little recognition that a considerable volume of the Great Britain origin goods coming into Northern Ireland will have to go through the red lane (Photo by Dan Kitwood/Getty Images)UK Prime Minister Rishi Sunak and EU Commission President Ursula von der Leyen unveil their deal at Windsor Guildhall on February 27. Esmond Birnie says that since then there has been little recognition that a considerable volume of the Great Britain origin goods coming into Northern Ireland will have to go through the red lane (Photo by Dan Kitwood/Getty Images)
UK Prime Minister Rishi Sunak and EU Commission President Ursula von der Leyen unveil their deal at Windsor Guildhall on February 27. Esmond Birnie says that since then there has been little recognition that a considerable volume of the Great Britain origin goods coming into Northern Ireland will have to go through the red lane (Photo by Dan Kitwood/Getty Images)

Tuesday’s publication of the House of Lord Sub-Committee Report on the Windsor Framework report is very welcome (‘Windsor Framework will make the Irish Sea[1] border worse than it has been under the Northern Ireland[2] Protocol[3] with grace periods, says House of Lords[4],’ June 25, see link below). It is a careful and comprehensive production. Three things strike me:

How little recognition there has been so far that a very considerable volume of the Great Britain[5] origin goods coming into Northern Ireland will have to go through the so-called red lane. The European Commission have been quite clear about this, the green lane is reserved for items with “final sale/end use” within NI. So, most of the goods bought in by our manufacturing and other production sectors for further processing and re-sales will be excluded.

My estimate, based on recent official data, suggests that about £2.6bn of (mainly) manufactured goods coming in from GB will be forced into the red lane (and that estimate includes the impact of the exemption of the smallest businesses – turnover less than £2m). All this matters in terms of frictions with respect to our main source of supplies and this in turn will translate into higher costs, a less competitive economy and hence less prosperity for all.

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I am also surprised how little concern there is about the on-going public expenditure implications of the framework. Central to the framework is the continued operation of the TSS (Trader Support Servive). During 2021 and 2022 £170m was spent on the TSS in each year. So, what is the long run public expenditure implication of the Windsor Framework? Is this an effective use of public money and who, ultimately, is going to foot this bill- Stormont or the UK government?

Finally, to use a quote from a mid-twentieth century economist (Friedrich von Hayek) we may be heading down the road to serfdom. In a number of respects the continued authority of the European Court of Justice will rob any future Stormont administration of certain policy options: it has become harder to introduce a freeport or, indeed, wider forms of tax devolution.

We are already the only part of the UK which does not have the benefit of duty free on flights to/from the EU. In itself that may seem a rather small matter but in days gone past people recognised the central importance of the principle ‘No taxation without representation’.

Alas, there seems to be a common tendency to accept our position as the best of all possible worlds- which it is not.

Dr Esmond Birnie, Economist, Belfast

References

  1. ^ Irish Sea (www.newsletter.co.uk)
  2. ^ Northern Ireland (www.newsletter.co.uk)
  3. ^ Protocol (www.newsletter.co.uk)
  4. ^ House of Lords (www.newsletter.co.uk)
  5. ^ Great Britain (www.newsletter.co.uk)

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