Irish unity blueprint: NI growth must more than double, economist says

Fine Gael has published a blueprint for Irish unity, and the economics inside it are blunt: Northern Ireland would have to grow much faster than it does now. The analysis, by economist Prof Stephen Kinsella, says the extra growth is needed to generate the tax revenues to cover the costs of transitioning to a unified state.

The gap is wide. Northern Ireland's annual economic growth has averaged about 1.3% a year since the early 2000s, according to Kinsella. Under a unification scenario he calls 'managed integration', the region would need annual growth of roughly 3% to 4.7% to fund transition-related borrowing over 25 years. His warning is stark: at 2% a year, no design repays its transition borrowing within 25 years.

Managed integration is not a sudden merger. It means public sector pay and social security benefits are gradually aligned, infrastructure spending rises significantly, and some public services run in parallel while institutions are merged. 'A plan for reunification has to start as a plan for faster growth in Northern Ireland,' Kinsella said, calling the required jump 'a high bar to meet, but it is possible.'

His growth recipe leans on infrastructure, including wastewater, the electricity grid and transport, plus better skills, more productive local firms and more research and development. Northern Ireland's devolved government has ambitions in those areas, but the report notes it has lacked the funding or political will to make major progress. The Irish government has already put money into cross-border projects such as the Narrow Water bridge.

Kinsella also glances at German reunification, often cited as a lesson for Ireland. He points to work by economists Michael Burda and Battista Severgnini showing east Germany failed to sustain its early catch-up with the west — though more recent data shows 'the long stall' through the 2000s eventually ended. Convergence restarted after 2011, ran fastest from 2012 to 2019, was stopped by Covid and has since slowed, especially outside Berlin.

He is upfront that the work needs sharpening, including an economic model of which households would gain from unification and which would pay for it. And he draws a line around what a fiscal model can settle: 'Whether reunification happens is a political and constitutional question that no fiscal model can or should answer.' If it does happen, he concludes, the quality of the preparation will decide whether it strengthens both economies or strains them — and that preparation can begin now.