Farm Ireland

Thursday 14 December 2017

'Hard' Brexit would be a hammer blow to food sector

'Many Irish experts under-estimating potential impact' says top economist

Economist Colm McCarthy
Economist Colm McCarthy
Darragh McCullough

Darragh McCullough

A 'hard' Brexit will make holding onto our existing British market and border access impossible, according to economist Colm McCarthy.

"The idea that existing border controls with Britain will continue when there are so many [immigrants] wanting access to that country is wishful thinking," he told delegates at the ASA conference in Kilkenny last Friday.

"The trading patterns that currently exist in the EU are the most logical ones, so the reason that we sell so much of our food into Britain is because it returns the best margins. So holding onto our existing food markets is just not going to happen," he said.

He added that many Irish commentators had underestimated the impact of Brexit.

"Germany, France and Britain are the big three in EU terms. If you asked me which one of those I'd least like to leave, it would be Britain, because the British have an interest in ensuring that Ireland doesn't get a bad deal. But it will not be the British negotiating on our behalf in Europe. It will be the Commission, and we know that neither France nor Germany care too much about how we fare. Just look at what Trichet did to us with the ECB."

His comments came during a panel discussion on Brexit, where Agra Europe's editor Chris Horseman depicted a similarly downbeat scenario post Brexit.

"Supports for British farmers will probably be lower because the idealogical stance of the UK has always been against subsidies for agriculture. There will probably be some redistribution of subsidies away from larger farmers now that the UK has a chance to write the rules to suit itself."

He added that it was looking increasingly unlikely that Britain would opt to remain in the EU's Single Market given the implications it would have on it's immigration policy.

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"If the UK doesn't want free movement of people, then it won't be allowed have free trade with EU. Instead it is likely to be something halfway between the relationships between the EU and Norway and Canada."

This would have serious implications for Irish trade with Britain.

"It will mean the disintegration of the UK-Irish free-trade zone, and a very likely reintroduction of border controls," he said.

While IFA president Joe Healy acknowledged that Brexit was a serious negative for Ireland, he emphasised the importance of farm leaders having a presence at the negotiating table to secure the best possible deal.

Panellists also flagged the possibility of a new power-axis consisting of France, Germany and Poland. Mr Horseman noted that bigger budget contributions would be required from EU member states to make up for the shortfall from Britain's exit.

But the agricultural policy analyst added that the absence of Britain's free-market views could help convince EU policy makers to strengthen agricultural supports further.

"We shouldn't underestimate the impact of the current farm income crisis, which has shaken confidence within European farming circles," he said.

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