Monday 24 July 2017

Brexit costs will damage, not boost case for united Ireland

The invisible Border at Newry is under threat from Brexit, while Enda Kenny and Arlene Foster have failed to develop a joint approach to fight new partition
The invisible Border at Newry is under threat from Brexit, while Enda Kenny and Arlene Foster have failed to develop a joint approach to fight new partition
Brendan Keenan

Brendan Keenan

THE Irish Question is very difficult, the spoof history of Britain, '1066 And All That', opined. Every time the English find the answer, the Irish change the question.

Now, with Brexit, the English have changed the question, but the answer is just as elusive.

The sudden re-emergence of a united Ireland as the answer is as mistaken as anything the British came up with in days gone by.

Whatever question to which unity might be the answer it is not Brexit. This is not just because of the politics - intractable though they are - but the economics.

I am not talking even of the €10bn or so subvention from London to Belfast, or the fanciful ideas of how this burden would be shared in a new constitutional arrangement. It is about the economic costs of Brexit itself to the island.

Floating Irish unity as an issue risks making those costs even higher, when every political, intellectual and diplomatic sinew needs to be strained to achieve the best terms for the island in the extraordinary negotiations which are about to begin; protecting as much as possible of what we already have and being ready on both sides of the Border for the major logistical changes to be made if Brexit really does happen.

A successful negotiation of all-island arrangements will require an all-island approach.

The events of the past few weeks and months have made that less likely, not more. But it is worse that. This unity fancy will make it more difficult to deal with that reality, not easier.

Everyone always has something to say about Irish unity (your columnist included). But hardly anybody - perhaps nobody - has found anything very helpful to say about a possible NIexit. Charging about on the well-trodden ground of Irish unity is simply dodging the difficult stuff.

A startling illustration was the apparent argument that leaving the EU would be so painful for the North that it would be better off in a united Ireland. The obvious objection is that, if the divorce terms turn out to be as harsh as that, they will also impose such economic losses on the Republic that unity will be the last thing on the agenda.

Much of this confusion seem to stem from what might happen to farming and agri-business, given that EU funds make up 80pc of the income of northern farmers. Before membership in 1973, though, British government support made up a similar proportion of farm income. It was southern farmers who lost out from the UK "cheap food" policy.

The same could well happen again. With agriculture accounting for 1pc of GDP, Britain can afford a cheap food policy. Indeed, it may have to introduce one; both to offset the unpopularity of other Brexit consequences results and to show off some shiny new trade deals with places like Australia, New Zealand and Argentina. The Republic should be very afraid.

In purely trade terms, Northern Ireland also seems to have less to fear. It exports just £3bn to the Republic and £2bn to the rest of the EU. On that basis, its £14bn sales to Great Britain are far more important. Unlike any change to its position in the UK, that will not be directly affected by Brexit.

Indirect effects are a different matter and Brexit may put paid to any northern hopes of building a worthwhile market economy on the back of foreign direct investment, irrespective of the rate of corporation tax.

It is a mistake to think primarily of the Republic and the North as trade partners with each other. Rather they each trade abroad, and abroad mainly means GB for indigenous companies - around 60pc of their exports for northern ones and 40pc for the south.

A better way to think about it is that each jurisdiction supplies the other with materials, semi-finished products and services which contribute to final sales. Business will not only suffer directly from Brexit, whether through tariffs, currency instability or reduced income support, but indirectly through higher intermediate costs and disruption of existing supply chains.

As well as threats to existing benefits such as the all-island energy market and cross-border research, the prospects for mutually beneficial developments (many of which should have been better established by now) in healthcare, education, transport, communications and pursuit of foreign investment will greatly diminish.

One of the few obvious points in all of this is that Brexit losses can be minimised and the island's potential maximised by pursuit of a joint north-south agenda. It is almost as obvious - although we still hope to be pleasantly surprised - that no-one in Dublin or Belfast knows what to put in it.

They have my sympathy. The inevitable results of a hard - or even firm - Brexit have been well explained.

A plan to mitigate them would require the EU to do things it has never done before and the British government to make special arrangement for Northern Ireland while juggling with Scottish independence and Tory eurosceptic paranoia.

Free movement (almost) of people across the Border looks relatively easy to negotiate; employment status a bit more difficult. If Ireland wins concession there - plus financial compensation - one can see why the rest of the EU might think that was enough. It might be enough for the public as well, but it would far from the best outcome.

Free movement aside, Ireland would still be split even more firmly in two by tariffs, regulation, duties on goods which would make further processing on the other side of the border uneconomical, and the need for separate transport routes and energy infrastructure. It might finish off all-island banking and reverse the welcome increases in cross-border business services and tourism.

A few months ago it looked possible that Belfast and Dublin could have drawn up proposals to avoid this new partition, using the existing cross-border institutions.

It would have required the utmost delicacy: all the constitutional difficulties would be on the unionist side, especially the implication that the Irish Sea would be part of the Border.

Yet even with the limited analysis which seems to have been done, unionists were sufficiently alarmed that, with large dollops of reassurance from Dublin, they might have considered a joint approach. Instead the Executive has fallen - to resume goodness knows when or how - and the southern media is full of united Ireland fever.

One has to conclude that whatever opportunity did exist has vanished.

Not for the first time, the vocal anti-partitionists have reinforced partition and done harm to both parts of the island.

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