Northern Ireland Is Winning Brexit

Julius Probst, PhD examines how Northern Ireland's dual market access since Brexit has fueled the U.K.'s fastest-growing regional economy — and its tightest labor market.

Photo credit: K. Mitch Hodge

While some people are still in denial, there is no doubt that Brexit has done significant damage to the U.K. economy. This is backed up by research from the Bank of England, OECD, academia, the financial sector, and the U.K. government. Precise estimates vary, but most studies show that Britain’s economy is about 2% to 6% smaller. The average British household is somewhere between £2,000 and £4,000 worse off because of Brexit.

But one region is bucking the trend! Northern Ireland (NI) is in a privileged position because it is the only place in the world that has dual market access. Local businesses can sell goods tariff-free to the EU and the U.K. Thanks to this unique status, NI’s economy has outperformed Great Britain in terms of GDP growth, salary gains, and job creation.

The adverse consequences of Brexit: a recap

A short summary of why Brexit was so harmful — feel free to skip this section if it’s too depressing.

One immediate effect of Brexit was a significant depreciation of the pound, causing higher inflation in the U.K., harming businesses and households alike. Brexit meant that trade with the EU became significantly more expensive and burdensome due to red tape. This is particularly problematic for small British businesses, many of which have cut back or stopped exporting to the EU altogether. And keep in mind that EU member states account for about 50% of British goods trade.

Another effect of leaving the common market is that the U.K. suddenly became a less attractive place to invest in. A standard result in economics is that market size matters. With the EU’s economy being five times larger than the U.K.’s, why would international companies invest in the smaller market only to face additional hurdles when moving products abroad? Finally, leaving the EU meant that the supply of workers from EU member states has dried up. Recruiting from Europe has become significantly more expensive and challenging due to visa restrictions. This is true for skilled workers in the white-collar space (tech, finance, professional business services), and even more so in the blue-collar space (engineering, skilled trades, construction workers). In recent years, more EU citizens have left than moved to the U.K. This reduction in the skilled workforce is problematic from a fiscal point of view. Research shows that EU workers are, on average, significant net contributors over their lifetimes.

All in all, Brexit was quite a terrible idea and none of the advertised upsides have been realized. “Singapore-on-Thames” was always a little bit of a pipe dream.

The Northern Irish exception

Northern Ireland occupies a unique post-Brexit position: while the U.K. left the EU, NI effectively remains inside the single market for goods. Thanks to the Windsor Framework, a hard border between Great Britain (GB) and Northern Ireland was avoided. To reduce friction, a “green lane” with minimal checks for items passing from GB to NI was designed for goods that stay in NI without moving into the EU. The end result is a hybrid arrangement found nowhere else: NI businesses gain dual access to both markets.

Local producers have benefited tremendously from the fact that they are the only ones that can ship tariff-free goods into the EU and U.K. alike — serving two markets of 450 and 70 million customers, respectively. This privilege has given the economy a boost. While the U.K. has grown by less than 6% in real terms since Q1 2020, NI has expanded by twice that much.

Breaking down economic activity by sector reveals some interesting facts. Unlike in Great Britain, where industrial production has stagnated, production in NI is up by about 10%. Manufacturing has done surprisingly well following Brexit, with some local businesses explicitly referencing NI’s unique position as an engine for job growth. Even more surprising, construction is up by more than 20%. Following years of inadequate housing supply, more investment has started to pour into housing and infrastructure.

What about the job market?

Thanks to its strong economic performance, Northern Ireland has by far the strongest labor market in the U.K., the only region creating jobs recently. With the severe slowdown of the economy and labor market — a result of global shocks (energy prices) and domestic policy decisions (tax and minimum wage hikes) — some 200,000 payroll jobs have been lost in the U.K. since early 2024. This is a decline of about 0.7% compared with NI’s 2.5% gain.

Since 2020, NI has added about 70,000 payroll jobs, an impressive number in a labor market of a little over 800,000 workers. Belfast alone created some 12,000 jobs — a gain of more than 9% — making it one of the fastest-growing cities in the U.K.

England’s unemployment has gradually increased from about 4% to 5% in recent years, whereas NI’s unemployment rate declined from about 3% to 1.8%. Scotland and Wales have also seen a rise, though less pronounced.

However, one reason NI’s unemployment rate is so incredibly low is elevated economic inactivity. While 20% of individuals between the ages of 16 and 64 are classified as inactive in England, the Northern Irish figure stands at about 26%. Inactivity has been a long-standing structural issue in NI, with many individuals depending on sickness or other welfare benefits. The fact that the good job market has been unable to pull in discouraged workers should be a big concern for policymakers. It proves that local barriers to entry remain a challenge for sidelined individuals such as a lack of childcare, healthcare or disability issues, limited access to jobs further away, or other factors.

Job postings and wage growth show elevated demand

Unlike the rest of the U.K., hiring demand remains elevated. Data from NIjobs, a regional job board in — you guessed correctly — Northern Ireland, shows that total job postings remain more than 30% above pre-pandemic levels. More encouraging, job postings have risen since late 2024, the opposite of what we’re seeing in the U.K.

As a result of the tighter labor market, wages in NI have risen at a significantly faster pace than in the U.K. between mid-2024 and early 2026, with growth peaking at around 8.5% last year. In recent months, though, wage pressures have converged back to the U.K. average.

What does this mean for recruiters?

Northern Ireland’s economy has boomed because local businesses have dual access to both the EU and U.K. markets. This special status has helped attract investment from abroad. Job growth remains positive and hiring demand elevated. Even global businesses are increasingly looking at Belfast as a place to invest inv, with strong economic growth in the Republic of Ireland creating additional spillover effects.

But all of this is also creating a challenge for recruiters. NI’s labor market is the hottest of all U.K. regions. And even with the unemployment rate as low as it is, pulling inactive individuals into the labor market remains a challenge. Appcast’s benchmark data shows that cost-per-application in NI is higher than elsewhere in the U.K., precisely because attracting candidates is more challenging. Do not expect this to change anytime soon as NI’s unique Brexit status is providing the region with a continued edge.