Protocol ‘means Northern Ireland will miss out on extra Covid support’

Ministers are braced for a fresh backlash from unionists over the Northern Ireland Protocol after Government sources warned that Northern Ireland will lose out from a proposed Covid support scheme extension.

The Government is understood to be considering an extension of the Recovery Loan Scheme – under which firms with a turnover of less than £45 million per year can each borrow up to £2 million – which is currently due to expire at the end of June.

But following an announcement by the EU that it is ending a temporary relaxation of state aid restrictions next month, Government sources said ministers would be forced to cut the maximum loan amount to £1 million for Northern Irish firms to avoid falling foul of rules in the protocol.

The shift would spark a fierce backlash from unionists and Tory MPs already furious that the protocol has resulted in hardship for some firms in Northern Ireland.

The agreement also meant that Rishi Sunak, the Chancellor, was unable to apply a UK VAT cut on items such as solar panels to Northern Ireland when he announced the move for the rest of the country in March.

The disclosure came as Boris Johnson prepared to travel to Belfast on Monday in a bid to overcome the stalemate caused by the Democratic Unionist Party's refusal to form an executive while the problems caused by the protocol remain unresolved.

Mr Johnson is expected to insist politicians must "get back to work" so they can deliver on "bread and butter issues" for voters.

On Saturday night, Mary Lou McDonald, Sinn Fein's president, accused the Prime Minister of being "in cahoots with the DUP" in preventing the formation of a new executive in Belfast.

On Sunday, as ministers prepare to meet as early as Tuesday to decide whether to issue legislation overriding parts of the document, Simon Coveney, Ireland's foreign minister, insisted that "moving to disapply the protocol would be a serious violation of international law".

Writing for The Telegraph, he said: "It would not only damage trust between the EU and UK, but also undermine the UK's international reputation and its standing as a strong voice on the rule of law "

Mr Coveney warned against the "apparent wish of the British Government to choose a path of confrontation and unilateral action", adding: "The protocol does not weaken UK sovereignty or Northern Ireland's place in the Union.

"Article one expressly acknowledges that the constitutional status of Northern Ireland can only be changed with the consent of a majority of its people, in accordance with the Good Friday Agreement."