A post-Brexit scenario with the most radical wing of unionism

After a hard start due to im­ple­men­ta­tion of the new post-Brexit trade rules, the UK’s exit from the EU will con­tinue to pose chal­lenges for Ire­land in 2022. Early last year, the new eco­nomic re­la­tion­ship be­tween the UK and the EU was set to begin, gov­erned by the 2020 Trade and Co­op­er­a­tion Agree­ment, and the With­drawal Agree­ment of 2019, which in­cluded the con­tro­ver­sial North­ern Ire­land Pro­to­col.

Yet this in­stru­ment, de­signed to keep the bor­der be­tween the two parts of Ire­land open, and which is key to their economies and the peace process, im­poses cus­toms con­trols in ports for goods ar­riv­ing in Ul­ster from the UK main­land and new bu­reau­cratic bur­dens that have led to a short­age of prod­ucts in the re­gion and new po­lit­i­cal ten­sions. Given the dif­fi­cul­ties of im­ple­ment­ing the new eco­nomic regime, Lon­don has cho­sen to delay the im­ple­men­ta­tion of con­trols on cer­tain prod­ucts for a year. These changes have upset the North­ern Ire­land Union­ists – rep­re­sented by the DUP – be­cause they are among the most hard­line Brex­iters and ad­vo­cate im­ple­men­ta­tion of the orig­i­nal agree­ment.

The DUP is fac­ing a key year in main­tain­ing its po­si­tion as the main party in Ul­ster, es­pe­cially in a re­gion that voted by a ma­jor­ity (56%) against leav­ing the EU. At the same time, Sinn Féin, the for­mer po­lit­i­cal wing of the IRA that sup­ports Ire­land’s re­uni­fi­ca­tion, could be­come the most voted party in Ul­ster’s his­tory.

In ad­di­tion to the chal­lenges posed by Brexit, the Irish gov­ern­ment is fac­ing a major change in its low-tax pol­icy, which has brought many ben­e­fits to the coun­try since 2003 by at­tract­ing multi­na­tion­als, es­pe­cially in tech­nol­ogy. This eco­nomic pol­icy has helped trans­form the is­land from being mostly agri­cul­tural to be­com­ing a tech­no­log­i­cal hub, host­ing global com­pa­nies like Google, Apple and Ebay.

Yet this pol­icy has come to an end. In Oc­to­ber, Dublin agreed to join the OECD’s in­ter­na­tional agree­ment on tax­a­tion and to raise its cor­po­rate tax from the cur­rent 12.5% to 15%. With this change, the Irish gov­ern­ment ex­pects to lose two bil­lion euros in rev­enue, al­though it hopes to make up for it with in­creased trade with North­ern Ire­land. It is also con­fi­dent of main­tain­ing its high GDP growth rate, es­ti­mated at be­tween 4% and 5% in 2022, thanks to fac­tors such as ris­ing ex­ports and the boost in do­mes­tic de­mand fol­low­ing the end of lock­downs and the high vac­ci­na­tion rate, which stands at more than 90% of adults. It is also hoped that tourism will begin to re­cover after two years of pan­demic.

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