Brexit 'could be worth €6bn', NTMA believes
BREXIT could result in a €6bn boost to the level of foreign direct investment into Ireland, the National Treasury Management Agency (NTMA) has said.
In an investor update, the State's debt management agency said foreign firms in the UK could consider relocating.
"This may be especially pertinent for firms who use the UK as a base for its EU operations," the NTMA note said. "Ireland could be a beneficiary from this displaced FDI. Estimates suggest some €6bn of FDI might be attracted to Ireland in the case of a Brexit."
The NTMA said that in the event of a UK exit, some companies may be forced to move within the EU in order to properly service the single market.
"Dublin would be an obvious choice for relocation," it said.
But it added that the amount of relocated activity would depend heavily on the outcome of post-exit trade discussions.
Martin Shanahan, chief executive of the IDA, told the Irish Independent earlier this month that the prospect of a UK exit from the EU is causing international investors to look at alternatives to Britain. He said IDA's conversations with companies have "increased and heightened" because of the uncertainty around a Brexit.
The investor presentation points out that the potential result of the referendum is too close to call, and that a high income and a younger voter turnout will be crucial for the remain side to win out.
Trade links between Ireland and the UK would suffer following a British withdrawal, with small and medium-sized businesses, particularly in agri-food and tourism, more likely to be affected by than larger companies by any imposition of tariffs or trade barriers, the NTMA said.
A report by the Economic and Social Research Institute (ESRI) late last year found that a Brexit would "significantly reduce" bilateral trade between the UK and Ireland by at least a fifth.
It said it would be particularly damaging for sectors that export disproportionately to the UK, such as food and beverages. Imports would also be affected.