The widely mistrusted, and in some cases, loathed, Northern Ireland Protocol (NIP) is to be revised following talks between the UK government and the EU. The original deal, a key part of the UK-EU Withdrawal Agreement, aimed to protect the integrity of the European single market while at the same time avoiding a hard border between the Northern Ireland (NI), which is part of the UK, and the Republic of Ireland (ROI), an EU member state. However, maintaining free trade between the north and the south of the island, accepted by all as key to the Irish peace process, has meant the imposition of border checks in NI to ensure that goods arriving from Great Britain and destined for the EU meet EU rules. This has effectively put a hard border running down the North Sea and compromised the free movement of goods around the UK's internal market.

For importers and exporters, customs declarations have added to costs and created a fresh layer of bureaucracy. The NIP has also contributed to a marked deterioration in relations between the UK and the EU that has further hindered bilateral trade. Still, in overall economic terms, the impact of the protocol has probably been relatively limited. However, politically, it has widened the gap between the nationalists and the NI Democratic Unionist Party (DUP) to the extent that Stormont's devolved coalition government collapsed last year and has not been replaced.

Under the new plan, goods will be divided into two different lanes. Those destined for NI only will go into a green lane and not be subject to customs checks. Those destined for the ROI (and so the EU) will go into a separate red channel where checks will be carried out. It will also seek to clarify the role of the European Court of Justice (ECJ) in potential trade disputes that relate to EU law. However, allowing the ECJ any role in NI will not sit well with the DUP or the staunch Brexiteers within the Conservative Party. As such, it threatens to reopen the pro- and anti-Brexit splits that threatened to pull the Conservatives apart during the original withdrawal discussions. Parliament will get to vote on the new package.

In sum, today's announcement is of much more political than economic significance and the fallout could yet be very dangerous for the Westminster government. Warring factions within the Conservative Party mean that political stability hangs by a thread and the risk of an early general election is very real. For investors, the new protocol does nothing to change that.

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