Sam Lowe / Mar 2023
The direct economic impact of the new Windsor Framework for Northern Ireland is negligible. Northern Ireland is small, and unless your business relies on moving food products, medicines or parcels from Great Britain to Northern Ireland, the precise provisions – which, if fully implemented, will make doing so a bit easier – are of little interest to most companies.
Of greater economic importance is the vibe shift that precipitated the agreement.
While the direct exposure of most large companies to Northern Ireland will be small, their exposure to the wider UK-EU relationship is often larger. And so long as the UK and EU were squabbling over Northern Ireland, questions remained over the sustainability of the UK-EU Trade and Cooperation Agreement.
As seen during the Trump era, trade disputes over specific policy interventions – for example, tariffs on steel and aluminium – can quickly lead to other, unrelated industries – such as Harley Davidsons and playing cards – being caught up in a trade tit-for-tat.
Good vibes also matter for investment. One of the causal drivers of lost UK economic output post-Brexit has been stalled real business investment. This began the moment the UK voted to leave, even though nothing about the UK’s relationship with the EU really changed until about three years later. Why? Bad vibes. (Well, massive uncertainty about the nature of the future relationship … but also bad vibes.)
Anecdotally, UK-based teams within large multinationals (particularly those with European HQs) have had to spend a non-insignificant amount of time trying to convince head office that the UK is still deserving of investment and resources.
Does the Windsor Framework fix all of this? No. There are still structural issues, such as reduced access to the EU market, that make the UK less attractive as an investment destination than before. But I expect good vibes to at least take some of the edges off.
The Windsor Framework itself is conditional on good vibes. Many of the flexibilities for Northern Ireland are contingent on the UK doing things – such as introducing new product labels – that it may or may not do quickly. So long as the UK and EU are getting on well, I don’t expect this to be an issue. If the vibes turn bad again, they could be.
Good vibes are good for business. And long may they continue.