One upshot of Brexit Johnson didnt foresee: bringing the Irish closer – The Guardian

It was supposed to be a deal no UK prime minister could ever agree to, an Irish sea border between Great Britain and Northern Ireland. Half a year on from Boris Johnson doing exactly that, while denying the fact, the economic consequences are becoming clearer.

Figures published by the Irish government last week indicate that a heavy toll for British trade can be added to the political turmoil unleashed by Johnsons signing up to the Northern Ireland protocol. The data shows evidence beginning to emerge of deeper economic unity on the island of Ireland, at a time when shipments between Britain and Northern Ireland have been disrupted by the Brexit border checks the prime minister promised would never happen.

With Northern Ireland effectively remaining a member of the EUs single market, the value of goods sent to the republic soared to 1.8bn (1.5bn) in the first six months of 2021, an increase of 77% over the same period in 2020. Irish goods exports to the region rose by 40% over the same period, reaching almost 1.6bn.

Meanwhile, Britain was subject to the full gamut of EU border checks for the first time in four decades, and trade fell accordingly. Exports to Ireland slid by 32% in the first six months after Brexit, while sales of Irish goods in the other direction rose 20%, in a sign that the republic isnt suffering as much as had been feared from disruption with its largest trading partner.

At this stage, it is difficult to say conclusively that leaving the EU and the Northern Ireland protocol will have a lasting impact on trade flows around the British Isles. The coronavirus pandemic is having a substantial impact, and isolating the Brexit effect is difficult as firms gradually adapt to the new rules amid a period of flux.

Official UK-wide trade figures show that after a cataclysmic fall in trade in January, exports and imports with EU nations have been steadily climbing closer to normal levels, as both Brexit and Covid disruptions abate.

However, the early evidence remains uncomfortable for the government. If it is sustained, Northern Irelands deepening economic ties with the republic and weaker ones with mainland Britain will raise questions over the regions relationship with the rest of the UK. It is an issue unionist politicians are sure to keep raising.

What is more, serious questions should be asked about how well informed the British political debate can be. There are no official UK government figures at least not in public form for trade between Britain and Northern Ireland. For the regions trade with the republic, the most up-to-date UK government data is for 2019.

Embarrassingly, the figures published by Dublin offer the best insight. Without official data to inform the debate, Britain must proceed in the dark.

While much of the damage of Brexit is self-inflicted, the snapshot from Ireland does suggest another imbalance is at play, as a result of actions by Brussels.

British exporters have been hit harder by Brexit because they faced border checks from 1 January on shipments to the EU, while Irish and EU exporters to Britain have benefited from a phased approach to checks the UK government opted for over a 12-month transition period.

Brexit supporters will latch on to this lack of reciprocation, with the evidence of its impact telling in the Irish trade figures. Yet our leaving the EU was instigated from London, and executed on terms agreed by Johnsons government in his haste to tell a tired electorate he would get Brexit done.

In October, the UK will introduce new checks on products of animal origin being imported from the EU, before 100% checks are introduced from January.

British retailers fear additional costs to the system will make matters worse as the country emerges from the pandemic, compounding issues with global supply chains and shortages of lorry drivers. Ministers must take more proactive steps to address these problems.

Theres a new energy rivalry in town, and it looks oddly familiar. It has been a decade since the energy industry was fractured by the seemingly binary choice between fossil gas and renewables. The government appeared to reignite that old feud last week with its long-awaited hydrogen strategy.

In the early 2010s, those who called for the government to back fracking to fuel a new energy self-reliance were fiercely opposed by those who believed onshore wind turbines held the key to a cleaner, brighter future. Neither wanted the other in their respective backyards.

Today the focus is on hydrogen a clean-burning gas that will be crucial to replacing fossil gas in heavy transport, factories and refineries. But how to produce it? Once again theres a choice between fossil gas and renewables blue hydrogen derived from the former or more sustainable green hydrogen.

Whitehall is eager to downplay the rivalry and has appeared to avoid making a choice either way, to the anger of climate campaigners who say blue hydrogen extracted from fossil gas, with capture technology trapping most, but not all, emissions could lock the UK into a fossil fuel future for longer than the climate can afford.

Blue hydrogen reduces the emissions of fossil gas by 85% to 95% but cannot eliminate them entirely. Green hydrogen is made from water and renewable energy, leaving only oxygen behind. On the path to net zero the winner should be clear, but green hydrogen has so far failed to capture the hearts, minds or spreadsheets of Treasury officials.

The burgeoning green hydrogen industry of disparate small companies has a mountain to climb than the major oil giants behind proposed blue hydrogen projects if it is to prove it can reach the scale required.

But the government should think about the outcome of the last feud. Fracking never got off the ground, but the wind sector has become a major industrial success story despite David Camerons crackdown on onshore wind subsidies. The renewables industry has consistently surpassed expectations, and green hydrogen could do the same.

Every little helps. Well, that was the mantra when Sir Terry Leahy ran Tesco, anyway. These days it would appear that he prefers to shop at Morrisons, because he is fronting a 7bn bid by the American private equity firm Clayton, Dubilier & Rice for the Bradford-based supermarket chain.

Last week, CD&R gazumped its rival suitor, Fortress, by putting an extra 300m on the table. At 285p a share, it is offering an eyecatching 60% premium to the grocers share price before the bidding started.

At this kind of level, shareholders could perhaps be forgiven for having their heads turned. Indeed, in a recent note, the Shore Capital analyst Clive Black said that if the City didnt wake up to the real value of Britains unloved supermarket stocks, it was not fanciful to suggest there could end up being none left on the stock exchange. Quite a claim, given that Tesco and Sainsburys are still there.

If CD&R wins control and, as some commentators are suggesting, installs Leahy as chair, he will be reunited with his former colleague at Tesco, David Potts, who has been running Morrisons for six years. That is when the task of delivering the goods for a new set of shareholder taskmasters will start, with Potts expected based on the sum being paid to start delivering a much better financial performance.

CD&R has closed the door to some of the usual get-rich-quick schemes deployed by private equity when it takes over a company. Its long list of pledges includes the promise not to engage in any material store sale-and-leaseback transactions. However, City watchers know that promises made during bid battles can be empty ones.

The higher the price goes Fortress is now considering its options and wants shareholders to sit tight the more leverage is likely to be involved in the final deal. But at the end of it all, Morrisons will still be the UKs fourth-largest supermarket, with a mountain to climb.

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One upshot of Brexit Johnson didnt foresee: bringing the Irish closer - The Guardian