Protocol may not be reason for NI economy growth, Tory MP says

Giving evidence to a House of Lords committee James Cleverly was asked if the NI Protocol was contributing to Northern Ireland "outperformance"

Northern Ireland's large public sector may be responsible for recent positive economic performance rather than the NI protocol, a Tory MP has suggested.

Europe Minister James Cleverly was speaking at a House of Lords committee.

A range of official data suggests that NI has had a relatively good recovery from the impact of Covid-19.

Data from the Office for National Statistics suggest that among the UK regions only NI and London have seen output return to pre-pandemic levels.

Other recent official data released this month also shows NI doing better than the UK average.

NI service sector output is now 4.9% above the pre-pandemic level seen in the final quarter of 2019 while average UK service output is 1.4% above its Quarter 4 2019 level.

NI's production sector output, which is mainly manufacturing, is 5.2% above the level seen in Quarter 4 2019, while the UK as a whole remains 1.8% below its Quarter 4 2019 level.

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The data for NI is not universally positive - the most recent quarterly ONS data suggests growth in NI slowed sharply in the first quarter of this year and was among the weakest in the UK in that period.

The ONS also cautions that regional data is more volatile than national estimates and so needs to be carefully interpreted alongside economic trends both in the regions and in the UK.

The protocol keeps NI inside the EU's single market for goods which means NI manufacturers have better access to the EU than firms in other parts of the UK.

Under the protocol, checks are required on goods coming into Northern Ireland from the rest of the UK

However, it also means that goods entering NI from GB face a range of controls which is adding to cost and complexity for businesses.

Giving evidence to a House of Lords committee, Mr Cleverly was asked if the protocol was contributing to Northern Ireland "outperformance".

He said it was "not yet clear" why the NI economy was doing well and he "didn't particularly want to speculate without having a look at the figures".

"Some of the elements we know to be true is that the public sector in Northern Ireland is proportionally larger than in many other parts of the UK.

"That is perhaps more resilient to the economic shocks we're seeing globally and across the UK.

"I can't in all good conscience look you in the eye and say that is definitely the reason but I think it could be a contributory factor".

Economists have not yet reached a consensus view on the impacts of the protocol, which will only become clear over time.