Cross-border trade exposed

A new report analysing cross-border supply chains in Ireland has indicated that businesses in Northern Ireland would be more exposed to any hardening of the border than those in the Republic of Ireland.

While much existing data has focussed on the overall nature and value of import and export trade to Northern Ireland, the Department for the Economy recently commissioned a report by the Northern Ireland Statistics and Research Agency (NISRA) to analyse the interdependence between cross-border businesses, by looking at good movement frequency and their intended purpose.

It is important to note that the overall findings are limited. The survey results relate only to trade where the Republic of Ireland is the origin or final destination of trade and does not take account of border crossings where goods travel to the UK, the EU or rest of the world. The findings also exclude non-VAT registered businesses, meaning that up to 60,000 small traders or those self-employed did not take part.

Cross-Border Supply Chain Survey Report(2015, 2016), NISRA, June 2018

The results found that local business exports (excluding financial and farming sectors) to the Republic of Ireland were estimated to be worth £3.4 billion in 2016 compared to imports of the same nature, which were worth £2 billion. It was also found that the 758,000 goods export deliveries from Northern Ireland in 2016 (by VAT or PAYE registered businesses) were almost double the import figure recorded for 2015 (419,000).

The 7,700 businesses in Northern Ireland exporting to the Republic of Ireland made an average of almost 100 deliveries at approximately £4,500 each in 2016. Those businesses (75 per cent) who had a value per trip of less than £4,500 while exporting to the Republic of Ireland, made up just less than 20 per cent of the total value of exports, while the 22 per cent of businesses who made trips worth over £4,500 accounted for 82 per cent of the total value of Northern Ireland exports to the Republic of Ireland.

Most of the cross-border transactions were made by micro and small businesses, which make up a large part of the Northern Ireland economy. The vulnerability of those involved in cross-border trade, if any hardening of the border were to occur, is highlighted in the fact that 74 per cent of export deliveries involved Northern Ireland businesses with fewer than 50 employees and 33 per cent carried out by businesses with fewer than 10. This detail might be somewhat overlooked in other high-level, value trade analysis, as even though small business is 93 per cent of exporters to the Republic of Ireland, they account for only 46 per cent of the value of such sales.

Cross-Border Supply Chain Survey Report(2015, 2016), NISRA, June 2018

A total of 39 per cent of Northern Ireland’s trade with the Republic was comprised of “intermediate” products — goods that are used as inputs into the production of other goods, indicating strong supply chain activity on the island.

Local economies

Further analysis found that while proximity to the border “increases the propensity to engage in cross border compared to domestic sales”, it is not limited to businesses in the border region. Looking at the nature of small value export activity (less than £2,000 per trip), the report found that low value export deliveries tended to be high frequency in a number of instances with businesses relying on delivery by mail, courier or as part of a van or truck load with multiple consignments for different customers on board.

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