The Northern Ireland economy has been placed at a competitive disadvantage by Britain remaining outside the euro, according to two economists writing in the current edition of the Irish Banking Review.

Prof John Bradley (ESRI) and Dr Frank Barry (UCD) said the recent trend in sterling relative to the pound had "created a serious decline in Northern Ireland's competitiveness relative to its main trading partner, the Republic, which accounts for 25 per cent of its exports".

Since many Northern-produced goods were sold as intermediate inputs to other British firms before being exported as final goods, Northern Ireland's crucial "intraUK" trade was unlikely to be protected for long from sterling's strength against the euro, they said. "This is a serious matter since about 80 per cent of manufacturing employment is in domestically (or UK) oriented sectors."

With Britain out of the euro, the Border would take on the role of a European policy "fault line", making it more difficult to encourage the deepening of North-South linkages.