Irish reunification would cost Irish taxpayers £17bn a year for two decades and require a 25% tax rise, study finds

The reunification of Ireland would impose huge financial pressures on the Republic, amounting to around £17 billion a year for 20 years and requiring a significant rise in taxes, a new study has found.

A report published yesterday by an Irish think tank Institute of International and European Affairs found that Ireland would have to significantly reduce public spending and cause an “immediate and major reduction” in living standards if Northern Ireland were to join.

The study concludes that the basic administrative costs of reunification, the loss of UK government ‘grants’ and other adjustments would represent a total annual cost of almost €11 billion (£9.5 billion). ).

But this amount would rise to around €20.5 billion (£17 billion) if Ireland brought Northern Ireland’s welfare, pension and public service pay rates in line with those in the Republic.

One of the report’s authors, Professor John FitzGerald of Trinity College Dublin, said: “Even though Ireland has a much higher national income, funding the needs of the people of Northern Ireland in a united Ireland would put enormous financial pressure on the Irish population. .’

He added the bill of €20bn (£17bn) a year would equate to “a third of the bank bailout each year”.

The report’s second author, Professor Edgar Morgenroth of Dublin City University, said some of the costs would be offset in the long term as a united Ireland would benefit from EU integration.

But he warned that these benefits would “take a considerable time” to manifest, adding: “People have bought into the idea of ​​Brexit without knowing what the exact implications would be… without knowing exactly what a united Ireland would look like, it It is very difficult to make very precise calculations.

“I think we need to do a little bit of planning to understand what the implications might be.”

Professor FitzGerald acknowledged that the cost of reunification would fall significantly if the UK agreed to absorb Northern Ireland’s share of the national debt – but said this was a highly unlikely scenario.

“It is not possible to look for someone else to pay for the unification. If that happens, we have to pay for it ourselves,” Professor FitzGerald told Irish broadcaster RTE yesterday.

The report has since been heavily criticized by Irish nationalist politicians.

TD Padraig Mac Lochlainn, whose Sinn Fein party has called for a vote on a united Ireland by 2030, questioned the validity of the report’s methodology and argued that economic growth precipitated by reunification would significantly offset the costs cited by the teachers.

Stormont Finance Minister Caoimhe Archibald also argued for reunification and said other researchers had shown unity could lead to a stronger economic future despite the initial costs.

“Reunification would best serve Ireland’s economic interests and bring economic and social benefits to the whole island,” Ms Archibald said.

“Professor Kurt Huebner, for example, reported that Irish unity could boost the island-wide economy by €35 billion over eight years.

“The key now is planning and preparation.”

The report, which has further stimulated debate over the prospects for reunification, comes just weeks after the Sinn Fein president said she expected a vote to take place within six years.

Mary Lou McDonald said she believed the referendum would take place before 2030, after Michelle O’Neill was elected Prime Minister of Northern Ireland.

She spoke on Sky News in February after Democratic Unionist Party leader Sir Jeffrey Donaldson mocked her for saying Irish unity was “within reach” and would need of the “longest arms of this island”.

“The recent elections in the North of Ireland and the weekend when my colleague Michelle O’Neill became Sinn Fein First Minister in the North for the first time are just indicators of the profound change that is taking place in Ireland,” she said.

“When I say unity is within reach, I meant in historical terms – I don’t mean it’s going to happen next week or next month. So you don’t need to have those long arms that Jeffrey is referring to. But what I am saying, and what I firmly believe, is that in this decade we will have these referendums.

Asked if she meant by 2030, she said: “Yes, and let me tell you, it’s not that far away, so there’s an awful lot of work to do.”

In February, McDonald also lobbied Labor leader Sir Keir Starmer to allow a border poll to take place if he becomes prime minister later this year.

Such a vote is at the discretion of the government, but there are criteria in the Good Friday Agreement (GFA) which state that a person must be summoned “if at any time it appears likely to him that a majority of those voting express the wish that Northern Ireland should cease to be part of the United Kingdom and become part of a united Ireland.

Successive British governments have consistently refused to publicly specify what criteria would be applied to measure public opinion on this issue.

McDonald said: “I hope that Keir Starmer and a Labor government, given that the GFA was in the first place an achievement of the Labor Party under Tony Blair, I hope that he will be very faithful in his words and in his spirit at the GFA.

Under the terms of the Good Friday Agreement, a border poll should be called by the outgoing Secretary of State for Northern Ireland when he believes there is evidence that public opinion in the region has evolved in favor of constitutional change.

But Sir Jeffrey Donaldson rejected suggestions of a poll within the next decade, insisting “we are a long way from a united Ireland”.