Tuesday 27 September 2016

'Brexit' crisis also an opportunity

Published 08/11/2015 | 02:30

Ireland exports 16pc of its manufactured goods and 19pc of services to the UK, after all, and currently imports 34pc of its goods from the UK and 18pc of its services.
Ireland exports 16pc of its manufactured goods and 19pc of services to the UK, after all, and currently imports 34pc of its goods from the UK and 18pc of its services.

Enda Kenny will tomorrow address influential UK business leaders at the Confederation of British Industry annual conference during which he is expected to emphasise the importance of a close relationship between the UK and Irish economies.

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Insofar as it goes that is fine, but the Taoiseach should be mindful not only of the negative consequences for this country of what is called 'Brexit' - British exit from the EU - but also of the potential opportunity presented to Ireland and to the EU during current negotiations on this delicate issue.

There is no doubt as to the importance of trade links between the UK and Ireland, more so to Ireland than to our nearest neighbour, in truth; but important to the UK nonetheless, hence the invitation to Mr Kenny from business leaders in London.

The Taoiseach's speech comes at a time when the UK is in the throes of a long-festering debate about the nature of its relationship with the EU. Last week, the UK Chancellor of the Exchequer, George Osborne, in an address to a conference in Germany, summed up the its position: "Quite frankly, the British people do not want to be part of an ever-closer union," he said, which was hardly a clarion call for outright withdrawal.

Yes, UK withdrawal from the EU would pose a significant economic challenge for Ireland, as a series of authoritative reports have stated, most recently by the Economic and Social Research Institute which last week warned that 'Brexit' could lead to lower wages, higher prices and major trade losses here.

Ireland exports 16pc of its manufactured goods and 19pc of services to the UK, after all, and currently imports 34pc of its goods from the UK and 18pc of its services. As a small, open economy, trade in goods is equivalent to almost 80pc of Irish GDP. Should the UK vote to withdraw, Ireland could see a permanent loss of 3.1pc of GDP by 2030 in a worst case scenario, and a loss of 1.1pc of GDP even in the best case scenario.

While it is important that Mr Kenny address the importance of trade links between the two countries, as an astute political operator he will also know that he should not go to the UK empty-handed.

The Taoiseach would be well advised to use this opportunity to emphasise that Ireland will back UK efforts to reform the EU. In that regard, he should offer this country as an honest broker in negotiations between the UK and other EU member states.

Mr Kenny may find that he is pushing an open door, not just among UK business leaders, but also among politicians throughout much of the EU. That is because the UK's withdrawal would significantly alter current qualified majority voting arrangements.

In the absence of the UK, France, with its protectionist mindset, would lead a bloc which would hold huge influence over future decision-making in the EU, as it would then be able to command a blocking minority of the voting weight.

Such an outcome would not be in Ireland's interests, or in the interests of many potentially powerful allies throughout Europe.

Therefore, Mr Kenny should find some common cause, not only with the UK but also with like-minded and influential natural allies such as Germany, the Netherlands, Sweden and others to help negotiate and have implemented reform of the EU, certainly, but also to further develop trade markets for this country. In every crisis there is an opportunity.

Sunday Independent

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