Thursday 29 September 2016

Irish economy so vulnerable due to strong UK links

Andreas Steiner

Published 09/08/2016 | 02:30

'The long-term effects of Brexit will depend on how the upcoming negotiations with the EU and other potential trading partners will go' Photo: PA
'The long-term effects of Brexit will depend on how the upcoming negotiations with the EU and other potential trading partners will go' Photo: PA

Politicians often refer to Ireland's unique role in the EU - it is the only country with a land border with the UK.

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Brexit causes uncertainty about the future of the Common Travel Area, the peace process in Northern Ireland and Irish-British relations in general.

Due to its strong trade relationship with the UK, the Irish economy may suffer more than other European countries from a UK exit.

The findings of a recent survey among experts, conducted by the German research institute Ifo, showed that Ireland will be among the economically worst hit countries worldwide.

Ifo - one of Europe's leading research institutes - conducts the World Economic Survey (WES). Four times a year it gathers predictions of more than 700 economic experts from 112 countries about their domestic economies.

The experts are economic leaders at multinational firms and banks, chambers of commerce, universities and research institutes.

In our July survey, which took place just after the Brexit vote, we asked the following special question: "Will your country be affected by Britain's exit from the European Union (Brexit)?"

Brexit will have the largest short-term negative impact on the EU, compared to other regions like America and Asia, according to those surveyed.

While the effects are less severe for the UK in the medium term, they remain strongly negative for Ireland. As such, Ireland figures among the worst hit countries worldwide, according to the opinion of our experts.

Our survey highlights that experts fear that Ireland's economy will severely suffer from Brexit.

Of course, the long-term effects of Brexit will depend on how the upcoming negotiations with the EU and other potential trading partners will go.

The survey points to the fact that Ireland has two vital interests in the negotiations between the EU and the UK.

Firstly, the uncertainty surrounding the UK's role in Europe in the future must be rectified as soon as possible.

Secondly, Ireland's strong economic ties to the UK must be maintained as closely as possible.

The more the UK remains integrated in the EU economy with free trade across borders, the less Irish companies will be affected by the UK's exit.

While close trade relations with the UK are in the interest of all European countries, this is especially the case for Ireland.

Andreas Steiner is an economist with Ifo

Irish Independent

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