19 February 2006

British see benefit of all-Ireland economy

Sunday Business Post

By Paul T Colgan
19 February 2006

The inclusion of a number of companies based in the North on the recent trade mission to India perplexed a few observers. Why, they asked, were these companies, which deal primarily in sterling and not euro, included on a business trip designed to market the Republic abroad?

Almost eight years after the signing of the Good Friday Agreement, the slogan ‘‘North South makes sense’’, unveiled by the SDLP last week, has still to obtain common currency in the Irish business community.

Despite the mixed reaction in some quarters, at least one joint venture was signed between a Northern company and an Indian counterpart and several other deals are said to be in the offing.

The British government is planning a similar trade mission to India in April and will be inviting along a number of companies that are based in the Republic.

According to the Irish and British governments, the development of a new all-island agenda is their main preoccupation at present. One Irish government source put it like this recently: ‘‘Peter Hain and the NIO (Northern Ireland Office) are very keen on cross-border activity at the minute.

They’re always on about it - it’s quite extraordinary. A few years ago, you would have been banging your head against the wall talking about this stuff - now it’s all go. We’re pushing an open door.”

While certain political considerations are partly behind the British government’s newfound enthusiasm for ramped up North-South cooperation, there is also a long-term logic to its thinking.

The North’s economy for the past 40 years or so has represented an intolerable drain on the British exchequer. Putting security considerations aside, the British taxpayer has to stump up for the inordinately large public sector which employs a third of the working population.

London pumps around stg£5 billion a year into the North.

Sooner or later - the British hope – the North will be able to stand on its own two feet. If this is to happen, then its integration into a wider all-island economy is deemed essential.

Hence the inclusion of companies from throughout the island on the trade mission and the promotion of increased entrepreneurship.

Negotiations between Dublin and the NIO towards a single inward investment strategy for the whole island are already taking place. When Northern Secretary Peter Hain announced the plan earlier this month, it passed well below the radars of most media outlets, obsessed as they were with the stalled political process.

‘‘I want a joined-up inward investment strategy because very often the real competition is not between North and South, but between the island of Ireland and places like eastern Europe,” said Hain.

Had a Northern Secretary announced something similar 20 years ago, he would have had difficulty getting to Belfast City Airport in one piece, such would have been the significance attached to it by unionists.

However, entrenched attitudes would appear to be on the wane. A number of well-known unionist businessmen have thrown their weight behind calls for the harmonisation of corporation tax on the island. Heralded by Goodbody Stockbrokers as a good idea last summer, the North’s traditionally unionist-dominated Federation of Small Businesses then launched a campaign in its support.

For its part, the Irish government has pledged to make all-Ireland considerations a central plank of any future infrastructure plans.

The Minister for Foreign Affairs, Dermot Ahern, revealed recently that all government departments have been told to incorporate the all-island dimension into their submissions for the next National Development Plan for the period between 2007 and 2013.

On top of this are arrangements for a single, island-wide renewable energy market and a joint economic audit by the two governments. The audit will focus on the detrimental impact the border has had on business on this island.

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