Friday 24 February 2017

A possible Brexit would hit Irish-owned firms hardest

Dr Edgar Morgenroth

Boris Johnson and David Cameron GETTY
Boris Johnson and David Cameron GETTY

After almost 60 years of expansion and integration, the UK referendum on EU membership that will be held on June 23 could result in the first significant contraction of the EU. Given that the UK is the second-largest economy and third-largest population in the EU, a Brexit would reduce total EU GDP by almost 18pc and slash the population by almost 13pc.

If the UK votes to leave the EU, there will be a two-year period of uncertainty when the details of the eventual relationship between the EU and the UK will be worked out. In the short term, the referendum has already increased uncertainty and has resulted in a slide of the value of Sterling.

A changed relationship between the UK and the EU could potentially have far-reaching consequences for Ireland. While it is impossible to write definitively about the eventual outcome of the negotiations between the EU and the UK that would follow a UK vote to leave, it is possible to identify the areas which are likely to be affected. These include trade, migration, foreign direct investment, energy and the EU budget. In addition, an EU without the UK there would imply a shift in the balance of power within the EU and a loss of influence outside the EU.

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