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The debate over the £10-15 Billion p.a. Barnett formula based subvention is clouded in controversy. Some Analysts, like Pennsylvania university Professor Brendan O'Leary. have argued that the true cost to Ireland could be more like €3 Billion p.a. The difference being due to NI's contribution to the UK's much higher defence expenditure, debt servicing costs and occupational pensions for UK military and civil service personnel which would not transfer to Ireland.

The NI civil service is also huge compared to the size of its economy - c.30% of the workforce - and you would expect some rationalisation and reductions as its functions were integrated into an all Ireland civil and public service.

The longer term argument is, of course, that there is no reason why a NI economy, integrated into the Irish economy and governed by more appropriate policies from Dublin and Brussels rather than London could not be as successful as the Irish economy and no longer require any subsidies to deliver a comparable standard of living.  How does Donegal manage with out such transfers, for example?

However the longer term could be a long time coming - see the former East Germany - especially if there is ongoing civil unrest. So in the meantime transitionary funding would be required if there wasn't going to be a significant impact on living standards and public services in the south - something opinion polls indicate would not be accepted as a reasonable price for re-unification and could result in a referendum vote against re-unification unless addressed.

Some funding might come from EU regional and cohesion funding, US investment, and the economies of scale an all Ireland administration might be able to generate. However if there is going to be a transitionary phase of Joint Authority with the UK allied to a transitionary continuation of NI political and administrative structures prior to full re-unification, it is not unreasonable to expect the UK to make a major contribution to the cost for the transitionary phase.

UK policies have massively under-developed the north compared to its former industrial glory and it will take time, appropriate policies, and leadership to restore it to something like its former pre-eminence in the economy of these islands. NI is currently excluded from EU services markets and future growth is likely to be much more dependent on those sectors. It is currently little more than a captive market for British manufacturers and service providers.

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by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Aug 4th, 2022 at 12:05:56 PM EST

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