Brexit – The View From Ireland

  • By Brendan Howard
  • 19/09/2018

Introduction

You are presumably aware that Mercia operates in Ireland, with separate operating companies in both Northern Ireland and the Republic of Ireland. In both jurisdictions, there is apprehension about the impact Brexit may have, and much has been written about hard and soft borders to date by many politicians, and we are happy –  and by that we mean reconciled – to leave it to them to sort out. Some things are clear however – Northern Ireland’s and the Republic of Ireland’s future trading relationships with both Britain and the EU will change, as well as the trading environment between Northern Ireland and the Republic of Ireland itself.

Northern Ireland

Northern Ireland has always been very dependent economically on Westminster with over 30% of workforce salaries directly or indirectly funded by the Chancellor. In recent years, Invest NI has been successful in attracting new businesses into Northern Ireland who wished to have an EU presence. It is hard to see how that may continue, and many NI business people are quite sanguine about the Brexit economic impact as a result. Economic dependence with Westminster is likely to increase further.

Republic Of Ireland

In the Republic of Ireland, because of the large volumes of trade with its neighbour, it was always said that when Britain sneezed, Ireland caught a cold. The biggest threat in the Republic of Ireland comes from disruption to trade to Britain. If no agreement is reached on free trade between the EU and Britain, then World Trade Organisation tariffs will be applied. There is no doubt Brexit will result in a reduction in economic growth in some manner. It still should be attractive for foreign direct investment, but the imposition of tariffs, customs duties or just old fashioned red-tape cannot enhance prosperity. These tariffs will inevitably result in increased prices – especially with foodstuffs. No doubt currency exchange rates and employment levels will inevitably be affected.

Borders

Within the island of Ireland, while politicians have talked about a wish that there would be no hard border, it is hard to envisage how an administrative hard border, with customs duties, VAT, import documentation etc can be avoided. It isn’t always appreciated that there is approximately 500km of border between both jurisdictions, and with only one motorway border crossing, it would seem that only complications can arise. There are indeed multinational companies who manufacture in one area and package in another. Presumably, they have their plan Bs, but there will inevitably be consequences. Approximately £4b worth of goods and services are exported to the Republic of Ireland from Northern Ireland annually. There is also the matter of over 30,000 people who live in one area and commute to work daily in another. Then we have EU legislation in one and British legislation in another, side by side. Indeed, at the time of writing, the EU have just proposed the elimination of daylight saving time, so at each border crossing point – hard or soft – we will probably have different time zones, different taxes, different health benefits, and different economic growth rates!

Hopefully someone clever has this fully thought through!

You might also be interested in these…