Northern Ireland

EU referendum: NI economy 'more vulnerable' to negative Brexit impact, says Oxford Economics

A man welding in a factory Image copyright Thinkstock
Image caption Northern Ireland's type of manufacturing industry was citied in the report as an area of vulnerability in the case of an UK exit from the EU

Northern Ireland's economy is relatively "more vulnerable" than other parts of the UK to potentially negative impacts of a withdrawal from the European Union, a new report has said.

It was produced by the Oxford Economics consultancy for the Department of Enterprise, Trade and Investment.

The report says the the main area of vulnerability relates to the high level of trade with the Republic of Ireland.

A referendum on whether the UK should stay in the EU will be held on 23 June.

Other areas of concern highlighted by the report are the relative dependence on foreign investment and the type of manufacturing industry in Northern Ireland.


Oxford Economics considered nine potential scenarios for the UK's trading relationships if it leaves the EU.

In the best case scenario there would be virtually no impact on Northern Ireland economy.

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Image caption Researchers found the UK economy would shrink post-withdrawal from the EU "in any plausible scenario"

That is described as the "liberal customs union", in which the UK would no longer have to contribute to the EU budget but could not make its own trade deals.

That scenario would see deregulation, tax cuts and only modest restrictions on immigration.

In the worst case, economic output in Northern Ireland would be more than 5% lower in 2030 than it otherwise would have been.

That is described as the "populist most favoured nation" scenario, in which the UK fails to make a free trade deal with the EU, aggressively clamps down on immigration and spends more on public services.


Under a "moderate free trade agreement", in which the UK makes a free trade deal, clamps down on immigration and concentrates on deficit reduction the Northern Ireland economy would still see growth 3% lower than it would otherwise have been in 2030.

Oxford Economics research found that "in any plausible scenario" the UK economy would have its growth curtailed post-exit from the EU.

In eight of the nine scenarios, the Northern Ireland economy would suffer a bigger hit than the UK as a whole.

The consultancy concludes that Northern Ireland would be particularly vulnerable if a free trade agreement could not be made with the EU.

That is mainly because of its "unique characteristic" of sharing a land border with an EU state.

It also reflects Northern Ireland's "reliance on foreign direct investment as a source of financing for investment".