On February 27, 2023, an agreement was reached between the European Commission and the United Kingdom centred around the Windsor Framework. The United Kingdom remains responsible for diligently implementing the Northern Ireland Protocol, a vital component of the Brexit agreement. All essential elements of the Windsor Framework have been integrated after consultations with the European Parliament and the Council of the EU. The gradual enforcement of the Windsor Framework is slated to continue until 2025.
A bunch of protocols and an Agreement
The Northern Ireland Protocol, a pivotal component of the Withdrawal Agreement, played a crucial role in the formalised Brexit process, marking the United Kingdom’s departure from the European Union in February 2020. This Protocol emerged as the collaborative solution chosen by both parties, balancing the UK’s desire to exit the EU internal market and customs union with the imperative of safeguarding the integrity of the EU internal market. Importantly, it achieved this without necessitating a strict border between Northern Ireland and the Republic of Ireland. Preserving an open border was instrumental in upholding the Good Friday (Belfast) Agreement, which brokered peace in Northern Ireland in 1998.
The Windsor Framework, an official agreement endorsed by the UK and the European Union, is an extension of the Northern Ireland Protocol. Its primary aim is to facilitate the movement of goods between Northern Ireland and the rest of the UK, although it has encountered substantial challenges and objections. On February 27, 2023, the Windsor Framework was announced by Rishi Sunak, the UK Prime Minister, and Ursula von der Leyen, President of the European Commission. This legal accord builds upon the Northern Ireland Protocol and follows two years of negotiations between the UK and the European Union (EU).
NI protocol, gift of EU
Keeping this in perspective, the Northern Ireland Protocol grants special status to Northern Ireland, ensuring its inclusion in the EU internal market for goods. Before entering Northern Ireland, goods from Great Britain undergo reviews to ensure compliance with EU standards.
The Windsor Framework enhances the flexibility of the Northern Ireland Protocol in specific areas while preserving its core principles. A vital aspect of this framework is the introduction of a new distinction for goods entering Northern Ireland from Great Britain. Customs procedures will be applied to goods destined for Northern Ireland and not intended for transfer to the EU single market (“non-at-risk goods”). “At-risk goods” are those destined for the EU single market, subject to standard EU regulatory controls. Additionally, the framework introduces the Stormont Brake procedure, granting the Northern Ireland Assembly the ability, in some instances, to manage the adoption of modified EU laws in Northern Ireland. Furthermore, adjustments have been made to rules concerning VAT, consumption taxes, and the protection of foodstuffs, animals, plants, and pharmaceuticals.
Negotiations of Westminster and Brussels
Earlier this year, Prime Minister Rishi Sunak and European Commission President Ursula von der Leyen celebrated the successful UK-EU negotiation of a new treaty known as the Windsor Framework. They stated that it effectively addressed concerns raised by the Democratic Unionist Party (DUP) regarding Northern Ireland’s position within the United Kingdom.
In recent months, communities throughout Northern Ireland have marked the 25th anniversary of the Belfast (Good Friday) Agreement. This historic accord remains a remarkable achievement for Northern Ireland, laying the groundwork for the peaceful, accessible, and prosperous society we witness today. Seeing the significant progress made over the past 25 years is a source of pride.
The remarkable progress of Northern Ireland over the past quarter-century has been made possible, in no small part, thanks to the support of both large and small businesses. Their ingenuity, innovation, and commitment to investing in the promise of a more peaceful future have played a crucial role in Northern Ireland’s journey.
How could this Agreement affect the economy?
Twenty-five years after that Agreement was signed, investors resumed to recognise that Northern Ireland within the United Kingdom offers all the right ingredients for economic success: unique talent, exceptional opportunities, a tradition of creativity and a healthy spirit of private-sector entrepreneurship. The Northern Ireland of today is evolving into a world leader in key growth sectors, with clusters of expertise and opportunities for growth, including artificial intelligence, innovative and digital industries, cyber-security, energy (including renewables), life and health sciences, and tourism.
The UK Government will again present this clear commitment to the Union and invest in its future prosperity through the Northern Ireland Investment Summit in Belfast on September 12-13. Delivered in partnership with Invest NI, the summit will strive to bring together one of the largest groups of international investors and businesses Northern Ireland has ever seen.
The Windsor Framework agreed with the EU earlier this year also honours a new era of partnership for the UK and EU and a stable framework for the future. The Agreement guarantees the smooth trade flow from Great Britain to Northern Ireland through a new green lane. The Windsor Framework marks a considerable step change in our post-Brexit relationship and a recognition on behalf of the EU of the problems created by the Protocol and the need for change.
The economists’ preferred, albeit imperfect, tool for assessing economic performance strongly suggests that any positive impact from devolution since 1999 has remained largely hidden. When examining GDP per capita relative to the UK average, the situation in 2020 hardly differed from that in 1999, as the Office for National Statistics reported.
Northern Ireland’s public sector is grappling with a challenging fiscal situation, as highlighted by the Northern Ireland Fiscal Council. The region has experienced numerous instances of overspending in 2022/23 and 2023/24, some of which were intentional decisions made while devolved ministers were in office. It is worth noting that simply undergoing a rehabilitation process will not, by itself, significantly improve the budgetary figures.
The Northern Ireland Protocol from text to reality
As discussed in previous Economics Observatory articles, the Northern Ireland Protocol represents a unique set of arrangements specific to Northern Ireland. These arrangements exist alongside the broader UK-EU Trade and Co-operation Agreement. Despite the backdrop of Brexit, the Protocol’s primary objective was to ensure that Northern Ireland remained aligned with the EU’s single market, customs union, and animal health and food safety regulations. The overarching goal was to secure uninterrupted access for Northern Ireland to the UK’s internal market.
In practice, however, the Protocol introduced certain restrictions and trade frictions when moving goods from other parts of the UK to Northern Ireland. Nevertheless, various exemptions and grace periods were implemented to mitigate these challenges. It’s important to acknowledge that economic and political considerations are closely intertwined in Northern Ireland. While the UK government may not openly acknowledge it, the effectiveness of the Protocol may be incomplete without restoring Northern Ireland’s devolved government. Whether such a restoration will take place remains uncertain. While media outlets often highlight the potential economic advantages of such a restoration, it is essential to exercise caution and consider the broader implications.
