DUP LEADER JEFFREY Donaldson has claimed that the Northern Ireland Protocol is costing the Northern Ireland economy £2.5 million per day, or £100,000 every hour (around €118,000).
Following the resignation of Northern Ireland’s First Minister and Donaldson’s party colleague Paul Givan last week, Donaldson has made the claim a number of times.
The Northern Ireland Protocol was one of the key elements in the Brexit Withdrawal Agreement that legally enabled the UK to exit the European Union (EU). The protocol keeps Northern Ireland inside the EU’s single market for goods. It allows goods to flow freely between Ireland and Northern Ireland and removes the threat of a hard border.
However, products coming from Britain now face additional costs in terms of new processes and paperwork as they have to be checked at ports to make sure that they comply with EU laws.
The claim we’re examining is that the Northern Ireland Protocol is costing the Northern Ireland economy £2.5 million every day, or £100,000 every hour.
Speaking directly after Givan’s resignation last week, Donaldson gave a speech in which he made the claims.
“In the 217 days that I have been leader of this party, the Northern Ireland Protocol has cost our economy £535 million. That’s £2.5 million every single day, and over £100,000 every single hour,” he said.
“It really does beg the question: why do other parties sit on their hands when our economy is being harmed to the tune of £100,000 every single hour?”
Donaldson made the claim again this week, citing the £2.5 million figure during a speech at Dromore in Co Down.
It is not immediately clear where Donaldson’s figures come from; The Journal contacted the Democratic Unionist Party asking for evidence to verify the claim, but no response was received by the time of publication.
The figure has been quoted multiple times in Northern Ireland, but the precise source of the claim is not known.
However, an NI-based academic specialising in Brexit who spoke to The Journal said it may be based on a calculation by Dr Esmond Birnie, a senior economist at Ulster University.
In August 2021, Birnie published an op-ed in The News Letter in which he estimated that the protocol was costing Northern Ireland £850 million a year.
When broken down, this is equal to £70.8 million a month, £17.7 million a week, £2.5 million a day and roughly £104,000 an hour.
Birnie’s figures were calculated using a limited dataset based on the experience of four businesses, including the extrapolation of figures from Marks and Spencers’ financial accounts. He does not make clear why he chose to use this methodology.
Based on the experience of these businesses, he estimated that all businesses in Northern Ireland have faced a 6% increase in the cost of bringing goods into NI from Britain.
“Given that the total flow of goods and materials coming into NI from GB is about £10 billion the rise in costs is equivalent to a bill of about £600 million annually,” Birnie said.
Birnie went on to claim that the money Westminster is spending to assist businesses that have been impacted by the protocol – an estimated £250 million each year, according to him - is a cost to Northern Ireland.
Adding what he alleged is the annual cost to businesses and the annual cost of Westminster’s spending together – £600m plus £250m – he arrived at the total sum of £850 million.
He deemed the £250 million in Westminster spending to be an opportunity cost, or money that can’t now be spent on health or education.
However, it is important to point out that there is no evidence to suggest that this money would be spent on health and education in Northern Ireland were it not being spent on the protocol.
The UK Government has not indicated that it would do this, and there is no way of telling whether this would or would not happen.
Removing the £250 million from the equation – because it is not a cost that businesses or the Northern Ireland economy has to pay – leaves £600 million. That means there is still £65 million between Birnie’s estimate and the figure of £535 million quoted by Donaldson.
The Journal contacted the DUP clarify the discrepancy, but did not receive a response by the time of publication.
Currently, there is no official data available for NI-GB trade since 2020. The information is collected on an annual basis by the Northern Ireland Statistics and Research Agency (NISRA).
A spokesperson for NISRA told The Journal: “NISRA will be publishing the 2020 imports (including purchases from GB) data at the end of March which will include a breakdown of the sales and purchases by goods and services, but do not have the information to show the cost of the Protocol.”
Birnie’s extrapolation of figures based on the experiences of four businesses is unreliable, as it is a selective sample of a fraction of the businesses in the North. There are no official figures available to show the true cost of the Protocol on Northern Ireland’s economy.
The estimate is based on assumptions and will ultimately end up being tested over time by actual economic outcomes.
Missing context
Further, Birnie’s estimate is missing context because it does not acknowledge that businesses in Northern Ireland now have an advantage over exporters in Britain, as they still have full access to both the EU single market and the rest of the UK.
It also doesn’t take into account other costs of Brexit, such as labour shortages, nor does it calculate any potential offsetting impact of Northern Ireland’s trade with the Republic or the EU, which data suggests has improved under the protocol.
According to the Central Statistics Office (CSO), imports from Northern Ireland to the Republic in the first eleven months of 2021 increased by 64% to €3,679 million when compared with January to November 2020.
Exports to Northern Ireland from the Republic were €3,305 million in the period January to November 2021, an increase of 48% in the same period in 2020.
Both of these show a positive impact on business in Northern Ireland, something that was not taken into account in Birnie’s estimation.
Other approaches
Using a qualitative approach to look at the impact directly on NI businesses, research carried out by Manufacturing Northern Ireland, which received 163 responses from NI-based manufacturers, suggested that businesses north of the border are happy to engage increasingly with EU suppliers.
When asked to rank the biggest challenges facing their business right now, nearly 60% of manufacturers reported that access to labour is their biggest issue. Four out of five said this was their first or second-worst issue.
Almost two-thirds of manufacturers surveyed said the protocol was their least challenging issue, with fewer than one-in-seven saying it was their biggest challenge.
Fewer than one in four said they continue to struggle with the new requirements in the Irish Sea. This is significantly down from 41.3% when surveyed in July 2021. Over two-thirds said they experienced no impact, are on top of the issues or see them resolving soon.
While there was an increase of firms reporting business as usual, one in five firms consistently reported that their suppliers in Britain are “unwilling to engage with Irish Sea formalities”.
After the first year, over 65% of firms are now reporting that it is business as usual with their EU suppliers, which is up from 45% in April and just over half in July.
Jeffrey Donaldson claimed that the NI Protocol is costing the Northern Ireland economy £535 million every year, £2.5 million per day, and £100,000 every hour.
The figures quoted appear to be based on a rough estimate, and there is no data available to prove whether they are true or untrue.
The estimate used a small sample of select businesses and did not take several factors into account when arriving at the figure of £850 million, including data which suggests that there has been more of a positive impact on firms in Northern Ireland.
Even if this is the figure used by Donaldson, there remains a disparity between the figure he quoted and the estimate, which The Journal could not account for. The Democratic Unionist Party did not respond for comment when asked about this.
Therefore, we rate this claim: UNPROVEN.
As per our verdict guide, this means the evidence available is insufficient to support or refute the claim, but it is logically possible.
TheJournal’s FactCheck is a signatory to the International Fact-Checking Network’s Code of Principles. You can read it here. For information on how FactCheck works, what the verdicts mean, and how you can take part, check out our Reader’s Guide here. You can read about the team of editors and reporters who work on the factchecks here.
To embed this post, copy the code below on your site
have your say