Tuesday 23 May 2017

AIB chief economist says he is more concerned over United Kingdom leaving the EU than bank's flotation

Oliver Mangan, Chief Economist AIB
Oliver Mangan, Chief Economist AIB
Sarah McCabe

Sarah McCabe

Oliver Mangan thought AIB's looming IPO would be his biggest professional issue this year. But it is the possibility that Britain could leave the EU which now tops his list of concerns, the bank's chief economist revealed at a Dublin Chamber of Commerce event this week.

"My biggest concern this year is the impact of a Brexit. We are already seeing its impact on the sterling to euro rate."

Mr Mangan, whose bank is preparing for an IPO in the second half of this year, implored Irish business people to voice their support for Britain remaining in the EU.

Ireland will not be able to negotiate side deals with the UK if it leaves, he said.

"If Britain leaves, our relationship with the UK will be governed by what the UK can negotiate with the EU, not what it negotiates with Ireland," he said.

UK voters grossly underestimate the value of their EU membership, he added.

"It is often claimed that the UK has a trade surplus with the EU and so they will enjoy all sorts of trade agreements if they leave.

"Actually, only 10pc of EU exports go to the UK, whereas 45pc of UK exports go to the EU. That is the critical statistic."

Even though the UK is not a member of the single currency, it is the number one beneficiary of foreign investment into the EU, Mr Mangan said.

"The main reason for that is that it has access into EU markets. France and Germany would love to take some of that investment. Other large European economies have a lot to gain from a British exit.

"There is no way, if the UK leaves, that the EU will allow it access to that valuable single market without adhering to all European rules and regulations and contributing to the EU budget."

Unlike its approach to the Scottish independence referendum, the Irish Government has firmly giving its backing to Britain remaining in the EU.

Border controls would be brought back between Northern Ireland and the Republic in the event of a Brexit, Taoiseach Enda Kenny warned in January.

Speaking in Amsterdam, Mr Kenny urged UK voters to back a referendum to stay in the EU, saying Britain would be "very weakened" if they decided to quit.

However, just half of Irish business people believe that a British exit from the EU would have a negative impact on their business, according to a new survey by the Dublin Chamber of Commerce.

The Chamber asked 281 businesses how they felt a Brexit would affect their operations. Just less than one in two said it would have either a negative (37pc) or very negative (10pc) impact.

One in 20 respondents said they thought a British exit would actually have positive or very positive consequences for their business.

The remaining 48pc of those polled anticipated a neutral impact.

The survey, carried out in the second week of February, included a mix of companies that do and don't carry out business in the UK.

Of those which don't, one-third still said they expected a Brexit to have a negative or very negative impact on their businesses.

Sunday Indo Business

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