'Be wary of using official trade figures to argue Protocol is no problem' - Esmond Birnie

At its heart the report is basically a set of official estimates, gauging how much trade Northern Ireland’s businesses have been doing each year, and whom they have been doing it with.

Both pro-and-anti-Protocol advocates have tried to lay claim to the data in support of their own political positions.

Trade data 'just serves to show how important GB is to NI' says DUP as pro-and-anti-Protocol parties try to lay claim to figures

But Dr Esmond Birnie, senior economist at Ulster University, said: “Commentators may rush to try to draw implications relating to the working of the Protocol… but we should be cautious.”

He said that there are a raft of things to consider when looking at the data – not least the fact that the pandemic scythed its way through the economies of all nations during 2020 and 2021.

But in terms of what can be gleaned from the report, he said: “The extremely rapid year on year growth in NI’s purchases from the Republic of Ireland may indicate what economists call ‘trade diversion’ (when trade barriers or protectionism goes up, businesses and consumers will shift some of their purchases to within the trade area, and reduce purchases from the ‘outside’).

"At the same time, compared to either 2020 or 2019, Northern Ireland in 2021 bought more goods from GB than before, albeit the rate of increase was lower than that relating to purchases from the Republic of Ireland (back to the point about trade diversion).

"It could be that NI businesses are buying the same (or slightly more, or slightly less) VOLUME goods from GB but at a higher cost per unit, and that higher cost or price is what is driving the growth in value of goods bought from GB.”

In addition, Dr Birnie also wondered why any mention of the Protocol had been left out of a report by Barclays Bank.

The report, published on Tuesday, was titled: ‘Supply chain issues see Northern Ireland manufacturers with goods worth over £1.2bn sitting in warehouses awaiting completion’.

Among the factors Barclays pointed to were “rising costs, the war in Ukraine, labour shortages and ongoing Covid lockdowns in China hitting supply chains”.

But nowhere in the report was there any mention of the Protocol.

Asked why, Barclays’ outsourced PR people said: “This is a UK-wide report so they haven't dived specifically into issues faced in Northern Ireland. They have quantitative regional data but nothing further from a qualitative perspective.”

Dr Birnie said: “Yes, the Protocol should be mentioned. It is just one factor impacting on supply chains, but it is a factor in Northern Ireland.

"In terms of their own figures in this report, [they seem] to be showing that the problem of goods piling up in warehouses unfinished because of lack of parts/components, etc, is actually disproportionately worse in NI compared to GB...

"That would require an explanation – the Protocol could be part of that explanation.”