Professor John Doyle:

I am very grateful for the opportunity to present today on research conducted in DCU and also along with Professor FitzGerald as part of the analysing and researching Ireland, North and South, ARINS, project, a joint initiative of the Royal Irish Academy and the University of Notre Dame. I welcome the focus on the economy and North-South co-operation in that regard. Recent research I have been involved in, including surveys and large-scale focus groups, has confirmed that the public has a strong desire for more information and a more structured dialogue on North-South co-operation and possible constitutional change. Digging deeper into that, they are most interested in the economy and public services. Those are their concerns about the future and possible constitutional change.

In my opening statement, I will make three brief points on the all-island economy. The debate has been dominated by discussion of the so-called UK subvention to Northern Ireland. It is an important issue but it is not the only issue and in my view not the biggest issue. The part of the subvention which would remain in a united Ireland is not the same as the one published by the UK accounting offices; that is for a different purpose. Professor FitzGerald and I might disagree on the final size that would be left, but nobody who has looked at it thinks it is the amount that is published. There are other more important issues to discuss.

The most important aspect is the absence of any economic dividend in Northern Ireland since the signing of the Good Friday Agreement. In some ways it is the reverse. Productivity is a key driver of any economy, with wage levels and living standards resting upon it. The two parts of the island had very similar levels of productivity in 1998. Gross value added per worker per hour is a standard measure and it was very similar. Now, 25 years later, the South is 40% more productive per hour worked. A huge gap has opened up mainly because of declining productivity in Northern Ireland and marginal increases in productivity in the South over that time. Rather than there being an economic dividend, most of that dividend has been in the South and there has been a real sluggishness about the economy in the North, which fundamentally is what causes the public sector problems in the North and the underlying low standards of living.

If the economy in Northern Ireland reflected that of the Cork-Kerry region, there would be unlikely to be any deficit in public finances in Northern Ireland. There would be a better standard of living and the possibility of improved public services. That is the challenge. It is not an unimaginable way to move. We are not picking somewhere on the planet that seems so different from us. We are asking why the Belfast region or Northern Ireland as a whole is not able to deliver the level of wages and economic conditions that we are able to produce for the counties of Cork and Kerry as a sub-region. If that was achievable, either in the short term or in the context of a united Ireland, in some ways that would completely change the economic dividend.

The most stable figure for the UK subvention to Northern Ireland usually used in the media is the pre-Covid figure of £10 billion. That is an accounting exercise but the UK states it. It is a perfectly valid one. It would be very similar to what the Central Statistics Office, CSO, would do here. However, it takes figures that would not move in the context of a united Ireland and it extrapolates them out per capita. For example, Northern Ireland's share of the defence budget includes the cost of the UK's Trident nuclear missile system. Therefore, Northern Ireland 's defence budget is £1.2 billion per year. The South's defence budget recently passed €1 billion for the first time. We know we have things to do in the South in improving our defence expenditure, but we are unlikely to more than double expenditure overnight or to introduce a nuclear weapons programme. Therefore, there are things that simply will not move, debt and pensions being the big ones and I will come back to those issues later if there is interest in them.

The Northern Ireland economy has very low unemployment. It is very similar to us in that it has been low for a number of years. However, it is largely a low-wage economy which is at the heart of the underlying problem with low taxation yields there, as well as poor standards of living compared with the South. Approximately 25% of the population are in receipt of state benefits because their wages are so low. As its jobseeker's allowance, for example, is £75 a week, it is not that state benefits are overly generous in driving that behaviour; it is the underlying weakness of the economy itself.

Two areas are being explored in the joint project with Mr. Hetherington's colleague in Ulster University's economic policy centre, which is trying to unpick why foreign direct investment and tourism have been so poor in the aftermath of the agreement. This is picking two important sectors of the economy which have not really grown. Foreign direct investment, FDI, performance in Northern Ireland is about 20% of the level that it is in the South pro rataallowing for population and there are real challenges there.

Colleagues in the ESRI did some work at the tail end of last year looking at some of the issues that drive productivity, trying to unpick why we have this big North-South gap. If we look at the South's investment in education infrastructure, a 1% improvement in the graduate skills of our population leads to a 1% improvement in productivity. It is a pretty straightforward equation. It shows that better investment in infrastructure and education leads directly to better wages. The method of how it happens is complex, but that is what happens. In Northern Ireland that was not happening. The education system certainly needs improvement. About 18% of young people leave school with a GCSE, equivalent of a junior certificate qualification, at most or even without a GCSE. That figure is only 7% in the Republic. Therefore, there is a big gap in performance. Further education is a significant benefit to the economy in the South and is almost non-existent as a sector in Northern Ireland. Those are things that would impact on foreign direct investment, but political stability is a key issue there. Moving from an era of conflict to an era where power sharing was unstable and then to an era of Brexit, there has never been a period where companies were willing to make a long-term investment, which has been a significant challenge.

Finally, I would like to flip the argument. It is very hard for any of us to predict what would happen even with the best economic models we have, but the question is why the Belfast region, which including areas like Lisburn and Newtownards has a population of about 750,000, would not be capable of attracting the scale of inward investment we have been capable of attracting to Cork and Kerry, not to speak of the Dublin region. It would also benefit the Republic of Ireland in the sense that Dublin is congested. During the week, the head of the IDA said it is now very difficult to attract new investment because companies ask where their employees will find housing. Transport is also an issue. Dublin is overconcentrated. Cork is considerably smaller and Galway, Waterford and Sligo are smaller again. Typically, in a European model, we would expect the second city to be about half the size of the capital city, making it attractive to companies of scale. The Belfast region is of that scale more or less.

The other cities in Ireland are not of that scale at this time, which means we lose out. There is a reason we end up with a very concentrated economic model around Dublin.

I have outlined the issues. The evidence of what the public thinks is that nobody expects a referendum on a united Ireland to happen this year or next, but people think it is too late when the referendum is called to have these sorts of discussions, when we are into the heat of campaigning and individuals can claim whatever they want to claim. People want to hear the arguments well before that, in a quieter atmosphere, when they have time to think about them and there can be a more structured discussion than has happened to date. I very much welcome this meeting.