Analysis: SDLP document's range of vision is unprecedented, writes Marc Coleman, Economics Editor

Yesterday's call by the SDLP to unify the two economies of Ireland - published in its North-South Makes Sense document - is a no-brainer, even if some will see it as a "popish plot".

The North faces unique economic challenges: its small market is a barrier to business growth; only two of its companies are publicly quoted.

Whereas Luxembourg - the EU's only smaller entity - draws body heat from neighbouring Belgium, Germany and France, Northern Ireland shivers on the North Sea, far from Europe's core markets.

Scotland, which shares this disadvantage, has North Sea oil to compensate, a market of over five million people and a dense belt of economic activity along the Glasgow-Edinburgh axis. The Republic of Ireland also shares this disadvantage, but can use tax and regulatory policies to overcome it.

And unlike Wales, Northern Ireland is separated from the rest of the UK by a surmountable, but irritating, sea barrier. Economic decline has led to massive subvention from London.

"We seem to be trapped in a public-sector economy. The retail sector is the fastest-growing sector of our economy and we look with envy at developments such as the creation of hundreds of graduate jobs in Cork by Amgen," says SDLP leader Mark Durkan.

The public sector accounts for two-thirds of Northern Ireland's economy, and as Durkan says, the retail sector - with some help from the construction sector - is the only real driver of growth in the private sector. High-technology manufacturing is thin on the ground in Northern Ireland.

But Northern Ireland has one huge advantage - it sits right next to one of the world's most successful economies. Its currency links with the UK and higher corporation tax rates divide it from that market. Invest Northern Ireland and PricewaterhouseCoopers also acknowledge them as factors affecting foreign investment there.

The SDLP wants to level the economic playing field, at least as far as tax is concerned. It proposes to create a 12.5 per cent corporation tax for the whole island of Ireland.

Unionist businesspeople like the idea - the UK's corporation tax rate is considerably higher than this.

How loudly they can say so is another matter, however. Of all the SDLP's proposals, this is the one that sounds most like political unification to unionist politicians.

The UK treasury opposes the idea for a more hard-headed reason. It fears to set a precedent for Wales and Scotland, whose independent assemblies are champing at the bit for tax-raising powers.

But that same treasury is at the same time pressing for Northern Ireland's massive subvention from London to be cut. There is possibly some room for negotiation here.

But how politically feasible is the SDLP's document? Mark Durkan says that his party's proposal has strong backing from business leaders on both sides of the divide and he isn't lying.

When it comes to securing foreign investment, lobbying for EU funds or lower taxation, Northern politicians are famous for their ability to put sectarian divisions on ice.

But the SDLP's new proposal is unprecedented in its range of vision. DUP supporters will see in it a plan for political reunification and support from Sinn Féin would make it difficult for moderate unionists to support it.

But if refocused and prioritised, the SDLP proposals just might obtain support from the Alliance Party and the Ulster Unionist Party.

A centrist cross-party platform to tackle Northern Ireland's economic malaise could be just what the doctor ordered.

The North boasts a good education system and relatively efficient markets in telecommunications and energy.

These can be exploited and the idea to secure affordable national rates for mobile phone calls across the Border is a sound one, as is the proposal to more closely integrate the electricity market.

Proposals to harmonise educational standards - through the establishment of a North-South higher education body - and to harmonise recognition of pensions are practical ways to create a more unified labour market.

The North's significantly lower cost base than the Republic also makes it sensible to develop a North-South strategy to maximise overseas investment.

If implemented in the presence of remaining currency and tax barriers, these policies could bias industrial and commercial interests to locate just south of the Border.

And then there is the proposal to merge the spatial strategies of the North and South. On these points, one has to ask: do they know what they're letting themselves in for?