Wednesday 21 March 2018

Europe must recognise our special links with Britain

John McGrane
John McGrane

John McGrane

If you travel regularly to London, you'll be familiar with the huge Crossrail tube extension project at Tottenham Court Road. You probably don't know that it's lined with 32,000 concrete panels and that each one of them is made by an Irish company in Westmeath.

They make them, haul them, sail them, then fit them better than any other supplier in the world could. It's a brilliant example of Irish enterprise thriving within the huge and valuable UK market.

And beyond big heavy industry, Irish small businesses too are innovating and finding the route to success at scale in Britain.

Like Hiro by Roisin, a startup foodmaker gaining big followers since Enterprise Ireland and Bord Bia helped it to access our nearest exporting opportunity.

And there's a reason why Dublin/London is the world's second busiest air route. In the tech sector, as just one example of many, the two capitals function effectively as a single cluster with teams in one commuting back and forth to the other to share resources and opportunities.

It's stories like these that prove that, in terms of Ireland's relationship with the UK, we are joined at the economic hip.

Take our high value food industry for instance. It's a little known fact that Irish-owned food companies employ more people in the UK than does, for example, Nissan's motor plant in Sunderland. Greencore employs over 10,000 workers in 40 towns in Britain making great sandwiches that are loved by UK customers. It employs about the same number of locally-born British workers and EU citizens who the UK welcomes to work under current EU rules. If it can't hire some of those employees or if it has to pay tariffs on importing raw materials through new borders, then it's logical that its costs would be higher and it will sell less if it passes on those costs. If it sells less, it invests less and ultimately employs less.

If the UK wants to leave but still trade with EU member states, it will have to pay tariffs or other costs that don't arise today. In any of the sample trade deals suggested to date, the UK would still have to allow EU workers into the country as well as comply with EU regulations and pay a fee to be part of the EU trade area - and that's what they're leaving to get away from !

Business doesn't do politics, it's just pragmatic. So it votes with its feet if the trading setup in one country doesn't sustain the returns it needs in order to sustain jobs. Take the legendary UK motor industry - it makes many times more cars than it sells to people living in the UK and it exports the surplus mainly to other EU member states. And companies like Nissan and even Bentley import much of the raw material in their UK-made cars from France, Spain and even Bratislava, then they complete the assemblies in Britain. That's the way global manufacturing works now, such that it's actually hard to say if a car or a sandwich is British or multi-originated.

If you put up barriers to the free flow of materials and skills that enable this, the firms logically move to where they face no barriers.

It's not just manufacturing. While the changes a Brexit will cause may take some years to affect these heavy industries, some side effects have started happening already. The collapse of the pound immediately increases the relative cost of products and services bought from Ireland by customers in the UK. Their natural response will be to ask you to bear the new cost, or to replace you with a different supplier.

And that's after all the hard work of Irish agencies to get our food onto highly valued British shelf space. And consider the huge money spent on research in UK universities every year by global pharma giants - why would they risk that without knowing the future environment to gain from their research? In reality, some have already stopped spending in the UK, offering a possible opportunity for Irish universities to exploit.

We need to know what exact form of Leave the UK wants. Then we need to support the governments in getting EU approval for a trade deal between the UK and Ireland that reflects our unique trading relationship.

And we need to get the EU to deliver on its promise of a more competitive, ambitious and less bureaucratic market.

John McGrane is chief executive of the British Irish Chamber of Commerce

Irish Independent

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