Oireachtas Joint and Select Committees

Tuesday, 4 May 2021

Joint Oireachtas Committee on the Implementation of the Good Friday Agreement

The Northern Ireland Economy: Discussion (Resumed)

Professor Edgar Morgenroth:

That is truer than ever after Brexit. Before Brexit it would have been much easier to work more at the Government level.

Regarding different Departments looking at convergence, with Brexit there is limited scope for convergence because it requires convergence on both sides. However, one should absolutely have in the drawer at least a rough plan as to what might or might not need to happen. This is one lesson we should learn from German reunification. Nobody had a plan in their drawer when that happened and it happened very fast. It emerged within the space of three months; it was a political avalanche. Mistakes were made when it came to reunification because nobody was prepared for it. Those mistakes were costly for the people, particularly with the loss of jobs in East Germany and for West Germans with increased taxes. They have now paid over €1 trillion and counting for German reunification.

An additional tax was put in place by increasing income tax and corporation tax by 7.5%. That tax still applies and now stands at 5.5%, and while many people are exempt from it, unification happened in 1990. It is something that costs money over a long time. That said, Germans in general are happy they have paid for it. They were willing to pay that price.

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