The Irish bureaucratic establishment has been warning that Brexit would be a disaster for Ireland. The Taoiseach has intervened, saying he hopes that Britain remains in the EU.
Irish ambassadors have been explaining why Brexit would be catastrophic for Irish business. The working assumption in bureaucratic circles appears to be that leaving the EU would be bad for the British economy and even worse for us.
In Ireland, the British debate is being presented as a battle between the head and the heart. The beating heart of England, with Anglo-Saxon blood flowing through it, is being painted as nationalistic, atavistic and backward. Little Englanders want to take England back to a dark period of splendid isolation.
When seen from the standpoint of the Irish bureaucratic elite, who have been exposed to the sophistication of Brussels for the past half century, these English/British nationalists are seen as politically backward, offensive and not plugged into the realities of the global economy.
Bureaucratic Ireland sees English nationalism as isolationist, backwards and passé, while the same Irish bureaucratic elite is embarking on a national jamboree celebrating the victory of similarly isolationist, inward-looking and ethnically divisive Irish nationalism.
The basic idea we are being sold is that our nationalists were and are enlightened, but their nationalists were and are stupid. In terms of the economic parameters of the debate, the Out side are seen to be emotional and, economically, couldn’t be trusted with a sweetshop. Contrast this with the In side in Britain, who are portrayed as sensible, measured and financially literate.
The truth is quite different. There is no evidence that an Out vote will spell economic disaster for Britain at all. And if Britain doesn’t suffer economically, there’s no reason to worry about the impact here.
Yes, Britain is our largest trading partner, but you know what trading partners do? They trade. This won’t stop. So the €1 billion in trade a week between Ireland and Britain will continue in the event of a Brexit.
At this stage, let us look at what the likely impact of Brexit will be on the British economy.
This week, the excellent British fund management company Woodford Funds published a comprehensive economic report on Brexit which was undertaken by Capital Economics, an independent economic consultancy.
They found that both the Out and the In side were overstating their claims and that in reality the impact on Britain’s GDP would be modest.
There are a number of significant things that will change. The main one is immigration.
Since 2004, annual net migration from the European Union rose to significant levels of around 100,000 people per annum since the Eastern European countries joined the EU. It has more than doubled since 2012, reaching 183,000 in March 2015.
This is a major issue for Britain, and it is reasonable to suggest that low-skilled immigration will be reduced substantially after Brexit.
In contrast, a system attracting higher-skilled immigrants à la Canada or Australia will be instituted.
This will raise low-skilled wages in Britain and reduce profitability of companies operating in agriculture and hospitality, but raise productivity in higher-skilled industries.
There is absolutely no way that Irish migrants to Britain will be affected, as an open border between both our countries has survived intact, even at the height of the Troubles. This won’t change.
In terms of trade, 45 per cent of all British trade is with the EU. Given that total exports account for 30.5 per cent of British output, this means that the value of all goods and services exported to the European Union are equal to 15 per cent of the British economy. And 18 per cent of all EU exports go to Britain.
No one has any interest in this stopping. The Germans simply sell too many cars in England for this to end. The chances of a trade deal even after Brexit are very high unless political vindictiveness overshadows commercial common sense. Hostile trade relations are in no one’s interest.
In terms of direct foreign investment, 44 per cent of all investment into Britain comes from the EU and 28 per cent of all investment into the EU comes from Britain. This shows how interdependent the economies are.
Initially, investment flows may be affected, but once the currencies settle down, there’s no reason to believe that investment flows will change.
The Out side claims that less red tape will make Britain a better place to invest, while the In side says the uncertainty associated with the new regime will slow investment. The reality lies somewhere in the middle – swings and roundabouts.
For Ireland, a possible problem would be if a more independent Britain competed more aggressively tax-wise for direct foreign investment.
This would be a problem for us. However, it is possible that remaining in the EU would be seen as an advantage – but that would only be marginal as long as competitiveness wasn’t an issue.
This brings us to sterling. There is little doubt that sterling would fall swiftly after Brexit because there may be worries about Britain’s large current account deficit and how it might be financed. But again this will be modest and not permanent.
Next up, the financial markets. Leaving the European Union could lose Britain its “passporting rights’. These allow British-based institutions to sell into the rest of the European Union without having a branch there.
This could be a big opportunity for the grubby business in Ireland of “brass-plating’ because big banks in the City would have to move certain functions to places like Dublin to be able to trade in the EU.
The short-term loss of some banking business would bring down house prices a bit in London and, in contrast, this could push up prices in Dublin.
There is lots of talk about a new border with the North – this is nonsense and doesn’t stand up to a jot of common sense analysis. First of all, who will erect it? We both opted out of Schengen and so we’ll just stay out of it and we’ll carry on as before.
If Brexit happens, it won’t make a huge difference. Once Britain’s economy is doing okay, we will too. Indeed, financial services might expand in Dublin and so too might foreign investment flows.
There is too much at stake between Britain and the EU to make a period of economic hostility after Brexit likely. However, if Britain begins to fracture thereafter, all bets are off. Why don’t we come back to that next week?
Well, if the Bureaucratic Establishment and the old guard of Fine Fail and Lie bore think it’s a bad idea I say Bring it On…
Much ado about nothing. There are a lot of terrified vested interests spouting messages of fear. Get used to it.
Ireland needs strong leadership now more than ever.
Who can offer that?
Sterling will be at its lowest when the hype around the Out vote is at it highest BEFORE the referendum takes place. Either way I think it will recover after the vote.
“The chances of a trade deal even after Brexit are very high unless political vindictiveness overshadows commercial common sense. Hostile trade relations are in no one’s interest.” Unfortunately political vindictiveness does overshadow common sense in the EU. Look at the treatment of Greece for the classic example. So there may be a push towards raising trade barriers to ‘punish’ the recalcitrant UK. Which of course the UK would respond to in kind – but with a government freed from the tyranny of the EU treaty would be able to use state power to offset any impact. Something that would not… Read more »
“For Ireland, a possible problem would be if a more independent Britain competed more aggressively tax-wise for direct foreign investment.” A nation with in independent sovereign free-floating currency doesn’t need ‘foreign’ investment. There is no such thing within a currency zone. Foreigners have to get Sterling to invest in the UK. So if they have to get it, then the UK government can get it just as easily and from the same place – the banks. Primarily the central bank. “There is little doubt that sterling would fall swiftly after Brexit because there may be worries about Britain’s large current… Read more »
@David McWilliams “WE WILL DO JUST FINE”
DONT BE TOO SURE
A NATION WITHOUT NATIONALISM IS NOT A NATION
“IF” THE UK LEAVE
-> IRELAND WILL BE SQUEEZED
=> GOODBYE IRISH TAX RATE
=> HELLO GERMAN SURPLUS MIGRANTS
=> HELLO FEDERAL TAXES
IRELAND FOLLOWED THE UK IN
-> NOT FROM WEAKNESS?!
-> THE UK WAS CORRECT!
-> IN THE INTEREST OF THE NATION
-> THE EEC WAS WORTH A SHOT
“SOME” IN THE UK
-> SEE “WRITING ON THE WALL”
-> GIVE THEM CREDIT.
-> IN THE INTEREST OF THEIR NATION
-> THEY ARE “JUST” CORRECT AGAIN.
For us, what effect will it have on road transport to and from Europe. Will Britain continue to allow its roads be used as part of a European Network and who will pay for their upkeep. They did place a blockade on the movement our trucks not too long ago. We are very vulnerable to the whims of an anti-irish element there without oversight from Brussels – look at the DUP up north and their OUT stance – what’s that about?
Should we start to invest in shipping and buy back Aer Lingus ?
I find it insightful that the same Irish politicians that are alarmed by the possibility of Brexit, have nothing to say about the overvalued Stock indices, and related ongoing instability – and the fact that Irish economy has become highly leveraged to the Nasdaq.
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Personally I fervently hope for an “Out” vote because Brexit will not only mean an exit from the European Union but an exit from Ireland. It will be impossible for a London Government to hold the United Kingdom together after a Brexit. Within months Scotland will organize its own vote to stay in Europe. Northern Ireland, albeit reluctantly and probably bitterly, will have to swallow its inbred prejudices and vote for economic survival by joining a thriving United Irish Republic with its capital Dublin fast becoming the Singapore of the West. Brexit will mean that Boris Johnston’s London will have… Read more »
100 years on from the 1916 Rising (an attempt to get out of an imperial sovereignty pooling arrangement ), Ireland’s political parties are desperate to prove their loyalty (in an almost Redmonite manner) to the current imperial sovereignty pooling arrangement. The paradox of the situation is considerable. I consider the novel “The Dead” by Joyce, a fascinating insight into the mores of the Irish ruling class, and what defines authority in Ireland, is terms of social mores. They really are in their own world. And the real world is an abstraction. It is as distant as a memory in a… Read more »
Hi David, I’m inclined to disagree with you on this one. I agree that some of the Pro-EU lobby are claiming that the sky will fall after a Brexit which I don’t think will be the case. However, I also think that the risks surrounding Brexit outweigh the potential benefits. The following link from the UK’s CBI provides an interesting overview of the studies that have been undertaken on Brexit and they tend to show that being a part of the EU adds about 4-5% to the UK’s GDP. If a Brexit does take place, I think it will lead… Read more »
“Emigrating in our 50s: ‘We wish we had left Ireland sooner'”
http://www.irishtimes.com/life-and-style/generation-emigration/emigrating-in-our-50s-we-wish-we-had-left-ireland-sooner-1.2541017
Here is Hitchens’s thinking about ‘Boris’ Johnson’s decision to join the ‘No’ camp, and Michael Gove’s:
http://hitchensblog.mailonsunday.co.uk/2016/02/what-did-they-mean-by-that-the-gove-johnson-riddle.html
I was surprised myself by both men’s decisions, particularly Johnson’s. Remember David’s article where he shared a ski lift with him in Switzerland? I assumed Johnson was not sincere but merely positioning himself for a bid at power, and Hitchens thinks likewise.
Cameron’s ‘renegotiation’ should be viewed in the light of the quote from Booker and North (above) about 1961.
It was always a mistake for Britain to join the ECU. Fortunately they did not join the Euro. Free trade or such is ok (exchange of surplus product to others willing to pay or exchange). Political union is bad (dominance of distant bureaucrats and a surplus of regulation plus loss of individual and national sovereignty). Monetary union is suicide ( the complete abandonment of national sovereignty and personal sovereignty too). The above applies to all peoples. But then again all people would be better off economically and socially without the dominance of the central banking system of debt based money.… Read more »
soil and the predominance should tread
soil and allows the predominance…
tread=read
It is all just a big game of monopoly
https://mail.google.com/mail/u/0/?tab=wm#inbox/1530aa502acc27c1
http://pro.beyondthedollar.com/LAUNCH4979PESNMTIUP/EBTDS2G2/?email=TONY.BROGAN2002%40gmail.com&a=9&o=7170&s=10538&u=3063108&l=565626&r=MC2&vid=FiGMY5&g=0&h=true
disregard the sales pitch at the end and this is a good synopsis of the economy, if US centric.
Adam Read the article and comments. The French Health System caught my eye. In France they have 9.4 nurses per 1000 population servicing 6.37 beds. In Ireland WE have 12.4 nurses per 1000 population servicing 2.8 beds. Ireland have “50% MORE” nurses than the UK servicing the same amount of beds (2.8 beds). They say that the NHS is a better health care system for the patient/customer. Ireland have “ONLY 32% MORE ” nurses than FRANCE. “HOWEVER” French nurses are servicing “128 %” more beds than our IRISH MOTHER THERESA NURSES. And providing a far better health service into the… Read more »
If there is a Brexit (soon or later), and the price of pounds sterling fall, buy them. Easy mopmeny to be made for the patient. The break-up of the Euro Zone is inevitable. One, two or three well structured European unons make sense, but the current structure is unworkable, with the Euro the main problem. If Britain goes, then someone will soon be next? Who? France? Spain? As this article points out, it would probably be shrewd of Ireland to stay in, mainly as a place for British companies to have an office in the EU or whatever replaces it.… Read more »
Two EXTRA DAYS HOLIDAYS for Irish nurses and lots more nurses are the solutions for our fecked up health care system.
We are a nation of doormat cowards.
Golden pensions for the people that run the system.
Sick children have to beg for charity.
We have no self respect.
Clare Byrne prog on health over now. Journalists spoke and then Clare announced that the health problems will not be solved tonight either. In all fairness, It is like living in STEPFORD when it comes to looking for solutions to problems in Ireland. Economic problems with our health care system and banks are just too political. Economists should be above politics when it comes to offering SOLUTIONS to REAL VALUE health budgets and IRISH BANK DEBT. Watching Irish 2016 economists in action regarding our present economic problems in health, homelessness and banking is like watching at a gom heart specialist… Read more »
Brexit is incidental in the overall scheme of things while central bankers run the show. Where is the politician, journalist, economist or writer proclaiming this truth? They are few, and far between. Whether it be the ECB, the FED, Or anyone of a hundred odd central banks they are conniving together to deceive, mislead and ruin the citizens of the very countries they swear to protect from what? Inflation . Inflation created at every turn by those self same bankers. Why 2% inflation is better than 4% or a .5% or negative they do not explain. Why is deflation bad… Read more »
If you’re in need of a very interesting read, I recommend Matt Taibbi’s most recent book: ‘The Divide’.
If you have even a spark of humanity in you, you’ll start eyeing your pitchfork.
I am amazed not to say horrified that David who resided in “Europe” for quite a while, does not consider that Brexit is (also) an opportunity to open ourselves into the rest of Europe. There are many more market opportunities in oher parts of Europe apart from Britain.
Maybe we are still under the yoke, even after 100 years??
Well said barrym. Thank you for that.
https://www.youtube.com/watch?v=vv5O_Gq30ow
http://www.iom.int/news/mediterranean-migrant-refugee-arrivals-top-100000
Average insurance paid by a surgeon in Ireland is €250000.
It’s the litigious people stupid.
http://usawatchdog.com/perfect-storm-of-financial-collapse-and-wwiii-michael-snyder/
The collapse is not an event but an ongoing process.
http://www.jsmineset.com/
Some interesting observations and discussion of world and US economies and the result of the lies and corruption causing and designed to enable war.
There are few green shoots to be seen.
http://davidstockmanscontracorner.com/financial-time-bombs-hiding-in-plain-sight/
Maybe completely out of touch here (perhaps Marie-Antoinette like ‘let them eat cake’), but thought it was about ‘teaching folk how to fish’, to institute the ‘6 killer apps’ of prosperity (as Niall Ferguson calls it https://www.youtube.com/watch?v=xpnFeyMGUs8), not bringing folk to Europe to ‘give them fish for a day’, to live on social welfare in Northern inclimates in a perennial dystopian dislocation from their natural climate, culture and citizenship in their own countries. Where is this going, is every country supposed to be the same, will there be any point in travelling abroad any more? Are the ‘Warriors of Fál’… Read more »
[…] looking at one of the headlines on something you wrote in the [Irish] Independent recently. ‘We will do just fine if there’s a Brexit‘ – how […]