So now that Brexit negotiations have formally started, we nervously await the outcome and the effects it will have on Ireland. While the IMF has said that the impact will be “negative and significant”, it has warned the Government to set aside significant resources to deal with the risks ahead.
Ireland is reliant on UK more than any other European country and certain sectors – agri-food; materials manufacturing and tourism – rely more upon UK markets than others. In the event of a hard Brexit with no UK-EU trade agreement, the likelihood is that special import taxes, or tariffs, would apply on trade between Britain and EU countries. Irish exporters to the UK could face tariffs, which could push prices up in the shops and make our products less attractive. It has been suggested that a ‘hard Brexit’ would mean that our GDP would fall by 3%.
According to Bord Bia’s figures, a total of €570 million of potential exports to the UK were lost last year due to the collapse in the value of sterling caused by the Brexit vote. That is just the potential exports lost in one sector alone and Brexit has not even happened yet. Other sectors, such as the financial industry may be set to gain as larger international financial services institutions look at moving their offices from London to Ireland. While full negotiations will take up to two years, this is a huge challenge for all involved as the list of potential issues seem to grow every day.
Taoiseach Leo Varadkar has promised that the Government will do all it can in negotiations to achieve the best outcomes for peace, freedom, rights and prosperity on the island of Ireland. The impact that Brexit will have on Ireland, UK and Europe will remain to be seen but no doubt it will significantly change our future economic landscape.