The prospects of an inward investment boom in Northern Ireland following last week’s Yes vote are being treated with caution. In fact peace could result in the erosion of many of the region’s economic incentives for investors.
Belfast’s Chamber of Commerce and the Northern Ireland Economic Research Centre believe that if the Troubles slip down the agenda, other economic issues could come into play.
Foremost among these are the future of Northern Ireland’s £3bn annual Treasury subvention, and the comparison between the corporation tax regimes on either side of the Irish border.
Whitehall is keen to reduce the overall aid package and the government-backed Industrial Development Board’s budget could prove an easier target than health and education.
The corporation tax issue is equally pressing. At 20% for small companies and 30% for major ones, the UK claims to have the lowest rates among the major European economies. However, the Republic of Ireland has only a 10% rate, which has been crucial in its winning some companies that looked at sites on both sides of the border. Budget cuts are privately accepted as an inevitable consequence of peace, although one senior businessman has already suggested that the new Northern Irish Assembly should seek powers to alter the tax system.
Dr Graham Gudgin, director of the NIERC, said: ‘There was a sense where the referendum was sold as Vote for this and get rich. Well, it’s not quite like that. I think growth can be maintained, but let’s not overstate it.’
Dr Alan Gillespie, chairman of the IDB, is holding back from saying that some stalled projects might now go forward. Analysis of the IDB’s activity over the past 12 months shows that while 11 major manufacturing projects worth £400m and promising 2,600 jobs have been announced, only three those by IMR, Humax Electronics and Meridian Medical Technologies involve firms new to the province.
Meanwhile, IDB officials have wasted little time in beginning to sell New Northern Ireland. Their first post-referendum trade mission to Taiwan set off almost as soon as the result was announced.