Why is Northern Ireland Always Relevant?

Northern Ireland is a jurisdiction within the UK with a fraught past, a difficult present and the potential for a prosperous future. Brexit or not, what happens in Northern Ireland impacts the rest of the UK and therefore Europe. Political upheaval always has commercial consequences. The legacy of Northern Ireland’s past often impacts on its future and understanding the processes at play, and their context, is vital for any businesses with a commercial interest in Northern Ireland.

Northern Ireland’s First Minister Resigns in Protest

Last Thursday, The First Minister of Northern Ireland (Head of Government), Paul Givan of the Democratic Unionist Party (DUP), resigned his position in protest over the Northern Ireland Protocol. As part of the power-sharing agreement in place between the DUP and Sinn Féin, his resignation automatically removed Sinn Féin's Michelle O'Neill from her position as Deputy First Minister, leaving Northern Ireland without a fully functioning Executive. The resignation was met with widespread dismay across the political spectrum and was labelled a ruse by political opponents of the DUP. For their part, the DUP are saying that they are following through on their political commitment to have the Protocol removed and to act decisively if it wasn’t.

What is the Northern Ireland Protocol and Why is it Causing Instability?

The Northern Ireland Protocol is an international agreement between the EU and the UK. In the aftermath of Brexit, it maintains the open border between Northern Ireland and the Republic of Ireland which was a central pillar of the 1998 peace accord. The Protocol agreement allows the transportation of goods between Northern Ireland and the Republic of Ireland, without the need for custom checks at the border. It also provides exporters from Northern Ireland with unfettered access to the UK and EU Single market. The Protocol effectively keeps Northern Ireland operating within the EU Single Market and provides it with the unique economic advantage of being able to trade seamlessly with the rest of the UK and the EU, unlike the post Brexit status of England, Scotland, and Wales. However, as Northern Ireland is in the EU single market, the Protocol also requires that certain goods arriving from the rest of the UK are checked at ports in Northern Ireland. This situation poses an ideological challenge for many Unionists who believe it creates a border down the Irish sea undermining Northern Ireland’s connection with the UK. Their position is that there should be no barrier of any type between Northern Ireland and the rest of the UK.

The Westminster Response

This is not the first time we have seen a collapse of the Executive in Northern Ireland. Following the instability period of 2017 – 2020, a cross-party agreement to prolong the life of an Executive was reached under the ‘New Decade, New Approach Agreement’. In an urgent attempt to avoid the collapse of power-sharing this week, and to keep the Executive in place until May, MPs in Westminster swiftly passed the final stages of the ‘Northern Ireland (Ministers, Elections and Petitions of Concern) Bill’, which give legislative effect to this agreement and will allow for the Northern Ireland Assembly (parliament) to continue without a functioning Executive for at least six months. This move by Westminster has lessened the likelihood of an early election and can be applied retrospectively to the date of the resignation. The Bill is expected to receive royal assent later this week.

What is at Stake?

The land border between the Republic of Ireland and Northern Ireland is not like other international borders. It is an historically highly sensitive political and ideological space. The peace agreement, signed by all sides in 1998, (Good Friday Agreement/Belfast Agreement) saw the removal of all visible signs of the border, including security installations and checkpoints. Following last week’s resignation, the leader of the DUP, Sir Jeffery Donaldson MP, stated that there shouldn’t be a return to a power-sharing government in Northern Ireland, unless issues around the border and the Protocol are resolved to the satisfaction of the people he represents. This action, notwithstanding the new time periods introduced in the Northern Ireland (Ministers, Elections and Petitions of Concern) Bill, could lead to a return of Direct Rule from Westminster, creating significant political challenges in Northern Ireland and for the British and Irish Governments’.

What are the Impacts and What Does This Mean for UK Businesses?

Northern Ireland’s business community, like any other, crave stability. The same can be said for the companies from other parts of the UK that have a commercial interest in Northern Ireland. While 2021 saw most businesses in Northern Ireland struggling to adapt to the new administration processes, Manufacturing Northern Ireland has recently reported a significant rise (6.4% to 20.4%) in the number of companies reporting increased business with the rest of the UK, because of the Protocol.

As confusion around administration eases, businesses in the UK will continue to look to Northern Ireland for a supply of goods, as their own supply chains continue to be impacted by the new Brexit import requirements. As the only jurisdiction in the UK with unfettered access to both the UK and EU markets, Northern Ireland has begun to carve out new opportunities. Proof of this is the decision of Wolfspeed, a US based developer of semi-conductors, to create 40 new jobs and a strategic shared services hub in Belfast which the company says, “will help to drive the expansion of its global operations into Europe”. Northern Ireland Chamber President Paul Murnaghan said that the collapse of the Executive has the “potential to seriously damage local and international business confidence in Northern Ireland”.

Thus far, in Northern Ireland’s history, politics has always trumped economics and the two are more inseparable there than anywhere else. Notwithstanding this, businesses have been adapting to the reality of the Protocol and are making progress. Public support for the Protocol is also on the rise according to an Ipsos-Mori poll conducted in December, with 52% of respondents agreeing that it is a good thing for Northern Ireland.

What say Britain, Ireland, and the EU?

For now, talks on the Protocol are continuing with Commission Vice-President Šefčovič and Foreign Secretary Truss stating that talks with the UK will continue at a technical level, when they meet again in London on 11th February.

Despite threatening to invoke Article 16 which allows the suspension of the Protocol under certain conditions, the British government seem to be content, for now, to seek political agreement on the need for change rather than repeal. The move by the DUP last week appeared to have caught Boris Johnston by surprise, as did the decision of its Agriculture Minister, Edwin Poots, to cease custom checks at Northern Ireland ports, a decision that was subsequently reversed in the High Court.

These unilateral actions show that the DUP have lost patience and feel unheard on the issue of the Protocol. They clearly see this as an existential threat to the status of those they represent in Northern Ireland, the precursor to reduced influence and power and an undermining of the Union. While their machinations look and feel severe at this juncture, they are also understandable given their fears for those they represent. 

It’s the EU’s view that the Protocol will work if the UK allows it to, if applied with flexibility and pragmatism. For its part, the EU Commission, and Ireland as an EU Member State, continue to listen and engage with the Unionist community and other stakeholders, and seek to find a way to make the Protocol measures less intrusive on businesses. The Commission has made proposals that directly address the concerns raised by Unionists, including significantly reducing checks on goods moving between Great Britain and Northern Ireland, and its view is that the British Government now needs to reciprocate this flexible approach.

The sudden resignation of the First Minister, renewed risk of political instability in Northern Ireland and threats to the commercial imperative of business might now focus the mind of The British Prime Minister on the importance of securing a new deal with the EU on the Protocol. Northern Ireland is at another crossroads, faced yet again it seems, with opportunity and threat in equal measure. There lies open the potential of significant commercial success and the kind of economic stability that has always proven to be the best antidote to the polarised politics of the province. The resilience of Northern Ireland’s economy and society is well proven. Now, the politicians owe it to the businesses and communities they serve to navigate a way out of the current impasse and to allow the province to prosper. Despite the political upheaval the potential for economic opportunity has never been greater in Northern Ireland and there remains an appetite amongst the political leadership in London, Dublin, and Belfast to understand the concerns of business as they relate to the current situation and the Protocol.

Global Advisory