Ireland Will Suffer In The Fall-Out From Brexit

 Ireland will suffer in the fall-out from Brexit

 Bridge over troubling waters: the famous Halfpenny bridge in Dublin, where politicians have been sounding the alarm for months about fears for the Irish economy should its nearest neighbour quit the EU

As the likelihood of a referendum on Britain’s membership of the European Union this year grows, spare a thought for the citizens of Ireland, both north and south.

Most analyses suggest that Ireland would bear a heavier economic cost than the UK itself from a British EU exit — and, indeed, would lose out even under the most optimistic scenarios. Yet citizens of the Irish Republic, other than the 400,000 resident in Britain, will have no say in the referendum, while the population of Northern Ireland comprises less than 3 per cent of the UK, giving its voters negligible influence over a decision that could have disproportionate consequences for their prosperity and security.

Dublin has been sounding the alarm for months about its fears for the Irish economy should its nearest neighbour quit the EU. The biggest concern is the potential impact on trade, given that the UK is Ireland’s largest trading partner. Obviously, much depends on the future relationship between the UK and EU, but if Britain ends up outside Europe’s single market, which seems plausible, then Ireland would be obliged to impose EU tariffs and to introduce border controls and customs checks. Ireland’s respected Economic and Social Research Institute predicts that Brexit could lead to a 20 per cent fall in bilateral trade.
A Brexit also could impose wider economic costs. To the extent that a British exit from the single market would lead to lower investment and therefore lower UK growth, that likely would lead to lower Irish growth, too. There could be consequences for Ireland’s jobs market. The UK traditionally has acted as a safety valve for the Irish economy, attracting migrants during economic downturns. One uncertainty, therefore, is whether Irish citizens would continue to enjoy residency rights in the UK and access to British welfare. Bearing in mind the anti-migrant tone of the UK debate, that cannot be taken for granted. Any restrictions could lead to an increase in Irish unemployment, creating higher costs for the Irish government.

At the same time, Irish businesses worry about the impact of Brexit. A UK government freed from the constraints of EU rules might be tempted to use state aid or to introduce its own regulatory rules and other non-tariff barriers to give domestic companies an advantage. The UK might open its markets to third countries, too, reducing Ireland’s market share.
A related concern is the impact of Brexit on the future direction of the EU. Without Britain’s pro-free market influence, the union might be tempted down a more protectionist path, inflicting new costs on Irish companies that put them at a further disadvantage in global markets.
What about the impact on Northern Ireland? This is hard to quantify, since much depends on decisions taken by a post-Brexit UK government. The first effects on Northern Ireland are likely to be negative, since much of the province’s trade goes to the Irish Republic and its largest industrial sector is agri-business, which is heavily reliant on EU subsidies. The prospects for the Northern Irish economy, therefore, apparently would hinge on the UK government agreeing to at least as generous an agricultural subsidy programme as that provided at present under the common agricultural policy — and probably more so, should the UK exit the single market — and London agreeing to pass on any savings on the cost of EU membership to Belfast (assuming that those savings were not offset, in turn, by lower tax receipts as a result of any wider hit to UK growth).

Yet the greatest uncertainty for Northern Ireland relates to the impact on the peace process. Dublin is clear that it believes that EU membership has played a vital role in bringing peace to one of Europe’s most troubled borders, providing a neutral context in which the two sides could meet as equals, creating an legal context for the dismantling of the border to create a genuine all-Ireland market and through the generous provision of EU funds to support reconciliation and regeneration. Northern Ireland’s predominantly Catholic nationalist parties share Dublin’s view that any move to reintroduce elements of border control between north and south would be a backward step in the peace process.
True, Ulster’s traditionally eurosceptic unionist parties are more sanguine, believing that the peace process is sufficiently robust to withstand a Brexit. They are confident that the common travel area between Britain and Ireland, which pre-dates EU membership, would continue to operate, providing unrestricted travel across the border — though this is something that neither the Irish parliament nor the Economic and Social Research Institute believe can be guaranteed.

Yet even leading unionist politicians worry privately about the risk of a break-up of the UK should a Brexit vote trigger a new Scottish push for independence. That would reduce Ulster again to the status of an English colony, with all the grim historical baggage this would entail — something that ought to put the Irish question high on the agenda for all referendum voters, not just the minority who are Irish.