Brexit Uncertainty and the Northern Ireland Protocol
This project examines the consequences of Brexit and the Northern Ireland Protocol for Northern Ireland firms and their trade within the UK’s Internal Market.
A key element of the Brexit debate was how to resolve the Irish border issue while leaving the EU’s Customs Union and Single Market. For firms in Northern Ireland, this generated uncertainty both with regard to whether or not Brexit would happen, and if Brexit occurred, uncertainty over the implications of the Northern Ireland Protocol.
Under the Northern Ireland Protocol, Northern Ireland remains in the UK’s customs territory while continuing to apply the EU’s customs legislation and, on goods, the EU’s Single Market rules. However, there have been differences in opinion over which goods will be subject to checks, how the checks will be carried out, and what infrastructure and institutions are needed. This has led to further uncertainty.
Brexit has also created an uncertain environment for workers, and EU nationals in particular. The uncertainty surrounding future changes in working/residence restrictions, as well as negative expectations about the economic impact of Brexit, could have induced EU migrants to relocate away from the UK. Since migrants bring skills and inputs that can be beneficial to the productivity of firms, changes in the composition of the UK labour market induced by Brexit could have affected firms’ operations and efficiency.
This research project - which is led by Professor Michael Gasiorek, Director of the UK Trade Policy Observatory (UKTPO) - will assess the impact of this uncertainty on the sales and purchasing activity of firms based in Northern Ireland, and the impact of trade barriers and regulatory controls arising from the implementation of the NI protocol. The project will also examine the impact of Brexit uncertainty on the labour market from which firms draw their workforce.
The core research questions will address the impact of Brexit uncertainty and changes in the costs of trade on:
- The output, sales and purchases of Northern Ireland firms to and from Great Britain and to third countries, and how this is related to underlying firm characteristics such as size, productivity or foreign ownership
- Workforce composition by nationality at birth, and whether the change in composition of the local labour market induced by migration from EU countries impacts the productivity of firms located in these areas.
Each component of the project will produce a minimum of two papers for publication in refereed academic journals, two UKTPO Briefing Papers and a series of blogs, and dissemination meetings.
The project findings will provide an improved evidence base for future policy making, which will benefit policy makers in Whitehall and Northern Ireland, the academic community, and the people of Northern Ireland.
This project is carried out in collaboration with the NI Department for the Economy and the Northern Irish Statistical Agency.
The project is funded by the Economic and Social Research Council as part of the £3.8 million Governance After Brexit research programme. The project will run for three years, until December 2023.
The project team includes:
- Michael Gasiorek, Professor of Economics and Director of the UK Trade Policy Observatory
- Dr Mattia Di Ubaldo, Research Fellow in the University of Sussex Business School; Fellow of the UK Trade Policy Observatory
- Barry Reilly, Professor of Econometrics at the University of Sussex