Northern Ireland economy continues to underperform compared to Republic

The report for the Government’s Shared Island initiative also shows the North is 'registering a rate of economic growth which exceeds that of the UK in totality'

The report was launched by Tánaiste Simon Harris as part of the Government's Shared Island initiative. 

The Northern Ireland economy “continues to underperform” relative to the Republic on numerous indicators but it is “registering a rate of economic growth which exceeds that of the UK in totality”, a new report for the Government’s Shared Island initiative shows.

The report was written by the Economic and Social Research Institute (ESRI) as part of the Government’s Shared Island research programme. It is envisioned that this will be an annual series comparing the economies of Ireland and Northern Ireland. 

Co-author of the report Adele Bergin said the it shows Northern Ireland continues to show “lower levels of disposable income compared to Ireland”, and also lower levels of “educational attainment, labour force participation and export intensity”.

In the year ending June 2025, Ireland’s modified domestic demand (MDD) — a more reliable measure of the Irish economy that gross domestic product (GDP) — grew by 3.2% while at the same time Northern Ireland’s output, as measured by the Northern Ireland Economic Composite Index (NIECI), increased by 2.8%.

The report said NIECI is “broadly equivalent to GDP”.

“While the rate of growth in Northern Ireland lags that of Ireland, the rate for Northern Ireland is more than double that of the UK in the same period,” the report said.

Ireland’s MDD is forecasted to grow by between 3.3% and 3.8% this year and by between 2.3% and 2.9% next year. However, forecasters are expecting Northern Ireland to grow at a more moderate rate of just over 1% this year and next.

Living standards

In terms of living standards, the report notes that in 2023, modified gross national income (GNI) in Ireland per capita stood around €63,500, compared to the approximate €34,500 GDP per capita in Northern Ireland which is a gap of 84%.

GNI excludes the net profits of companies that have been sent abroad and strips out the impact of intellectual property held here by companies and leased aircraft.

GDP is not a reliable measure of economic activity in the Republic of Ireland because it is heavily skewed by the presence of numerous multinational companies here. For that reason, MDD and GNI* are better measures of the health of the overall economy.

The report also said that hourly earnings were 29% higher in Ireland in 2024.

While all these indicators skew in Ireland’s favour, the report noted that economic policy formation differs significantly between jurisdictions as Northern Ireland has “very limited revenue raising powers or powers to use the tax system to further policy objectives”.

Employment

When it comes to employment, Mr Bergin said the most recent data shows comparable rates of employment growth in the year ending quarter two 2025 with employment growth in the Republic of Ireland at 2.3% while in Northern Ireland it stood at 2.5%.

Based on data from 2024, Ireland has higher labour force participation, 78.5%, and employment rates, 75.1%, than Northern Ireland, 75.7% and 74.3% respectively.

While Northern Ireland’s unemployment rate was lower last year — 1.8% versus 4.4% — the report said this must be “viewed in the context of the lower participation rate in Northern Ireland”.

“Ireland has higher enrolment rates in education across most age groups, particularly in post-compulsory and adult education,” it added.

Population

In terms of demographics, between 2015 and 2024, Ireland’s population has grown by 14.8% which was driven by strong net migration whereas Northern Ireland’s population rose by 3.9%.

Ireland also has a younger population compared to Northern Ireland as well as a lower old-age dependency rate — 23.6 vs 28.6 in Northern Ireland — which the report says suggests “more favourable long-term demographic conditions”.

Launching the report, Tánaiste Simon Harris said the series will build up a “crucial evidence base on economic similarities and differences, North and South, and help identify how we could co-operate more for mutual benefit, across a range of policy areas”.