Customs union must be part of Brexit deal says shadow chancellor

Posted By: November 20, 2017

Allison Morris. Irish News. Belfast. Monday, November 20, 2017

A CUSTOMS union across the island of Ireland must remain for the good of the economy, shadow chancellor John McDonnell has said, as the most recent evidence shows that plans to leave the EU are already costing households in Northern Ireland more than £400 a year.

Mr. McDonnell said that “discussions should be had” about preserving an open[customs] union between Northern Ireland and the Republic.

Speaking on the BBCs Andrew Marr Show, the shadow chancellor said: “Bringing back a hard border I think would be a nightmare.

“We have to have a relationship which is as close to the customs union. I would not want to see anything that undermines the peace process in particular and all the gains that we have had.”

When pushed on whether there should be a “unique arrangement” over a customs union between the North and South, he said: “I think that’s part of the discussions that need to take place”.

Mr. McDonnell is the latest high profile figure to back special arrangements for Northern Ireland when Britain leaves the EU in March 2019.

It comes as Allied Irish Bank (AIB) has released the latest Brexit Sentiment Index which shows 41 percent of small to medium employers (SMEs) in Northern Ireland are already feeling a negative economic impact.

Only nine percent of SMEs in Northern Ireland have reported a positive financial impact from Brexit.

The resulting economic uncertainty means that 31 percent of small businesses surveyed in Northern Ireland have said they are reviewing, postponing or canceling plans to expand

It comes as new evidence has shown that higher inflation and the reduced growth of real wages is costing the average household over £400 a year.

The Centre for Economic Performance (CEP) has found households at all income levels have experienced higher inflation because of the referendum.

The latest CEP study has shown that the price increases on everyday items add up to a cut in annual income for the average worker of around one week’s wages per year.

Among the items worst hit by an inflationary hike are bread, cereals, milk, cheese, eggs, tea, beer, and wine.

In the aftermath of the referendum the pound depreciated by around 10 percent, raising inflation by increasing the cost of importing goods.

Aggregate inflation increased by 1.7 percent in the year following the referendum, indicating that the vote has cost the average household around £7.74 a week or £404 a year.

The CEP study found that Northern Ireland has been the worst hit by inflation, which is thought to be because of the currency fluctuation benefitting businesses in the Republic importing goods.