To stay out of a recession, we need to get on with hashing out a deal on Northern Ireland
Since the UK voted for Brexit, Northern Ireland has been a headache for politicians and businesses alike. Time to finally end the madness to boost trade and avoid a recession, writes Chris Hayward.
With rumours of a revised Northern Ireland Protocol deal close to completion, it seems as if long and tortuous negotiations could finally reach a breakthrough. I certainly hope so.
Political stability underpins business confidence so a positive resolution to these talks would be welcomed by firms on both sides of the Irish Sea. This is particularly relevant to the City given the importance of financial and professional services not only to UK-EU trade, but also to Anglo-Irish relations.
Vital to any new agreement will be trust. Every single day, billions of pounds of transactions in the City are completed on the basis of trust.
Though political relations between London and Dublin have been difficult in recent years with trust hard to find, financial bonds have remained strong.
Total trade in goods and services between the UK and Ireland was £82bn near the end of 2022 – a year-on-year increase of 25 per cent.
Half of the total trade to Ireland – £34.5bn – was services, of which £3.5bn was financial services exports.
Such figures are clear evidence that – in the financial world at least – ties between the golden triangle of Anglo-Irish cities, Belfast, Dublin, and London are alive and well.
For both the UK and Ireland to harness the mutual benefits of trade, we will need to work closely with our closest trading partner.
Over the last year, everyone in Europe has collectively felt the same economic shocks of inflation, high energy prices, and cost-of-living struggles. We must work with our European partners to overcome these issues together.
Indeed, healthy relationships with both the European Union and more specifically, Ireland, are key for us in the City, not just for the financial and professional services sector, but also the wider economy.
Even though the UK has narrowly avoided a recession, for now at least, consensus around the need for a plan to boost growth grows daily.
By contrast, Ireland looks to have been the strongest-growing nation in the EU last year but economic headwinds across the continent are set to remain strong in 2023.
With UK and Irish policymakers looking for vehicles to drive our economies forward, harnessing the power of financial and professional services within our closest trading relationships would be a good place to start.
Going for growth requires a vision for the future. Co-chaired by the Lord Mayor and myself, the City Corporation is developing an industry-led vision for what UK financial, insurance, and professional services will look like by 2030 and beyond.
The recent Edinburgh reforms for financial services are welcome but there is much more we can do. The UK’s prosperity relies on our being at the heart of a global system, and especially on cooperation with our neighbours in Ireland and across Europe.
Over time, it will be entirely natural for the United Kingdom and Ireland’s financial regimes to evolve as we pursue our own agendas. That being said, in areas where we have shared challenges such as sustainable finance, tech innovation, and digitisation of the economy, strong dialogue will be critical.
Developing good will and trust, including by agreeing practical and sustainable measures for the Northern Ireland Protocol, will be essential to drive the growth that our households and businesses need.