McGuinness at ESRI criticises analysis of cost of united Ireland

According to the analysis, unification would add around 5% to the Irish Government’s deficit and would add as much as 10% to the deficit under other assumptions that public sector pay rates in the North were to match those in the Republic.

Unifying the country “would put huge financial pressure” on citizens in the Republic, “resulting in an immediate major reduction in their living standards”, Mr FitzGerald said in a commentary on the IIEA analysis, which argues that the low productivity in the North should be tackled over a long period.

However, Mr McGuinness at the ESRI said the authors have presented “a static” analysis on the size of the Northern subvention that is unrealistic in terms of the way unity would unfold.

“This mini-industry of estimating subvention, which seems to assume it is a constant that will apply immediately following a border poll, really makes no sense in terms of the reality of how a transition around constitutional change has to happen and has to be managed and planned for,” Mr McGuinness said.

He said the IIEA analysis ignores “fundamental facts” that subvention exists because the Northern economy has very low productivity, but that “low productivity is not set in stone and can be changed with proper policy and investment”. 

Mr McGuinness said economists have long recognised that low productivity in the North had been getting worse over time. But policies and investments would seek to reverse the decline in the North’s productivity and reduce the subvention, he said.