Matthew Ansell explains what challenges the Republic of Ireland faces post-Brexit.
When the citizens of the UK voted to leave the EU the ramifications were immediately felt by its neighbours in Ireland. With the Irish Stock Exchange losing 7.7% of its value in the immediate aftermath of the vote, the Irish public’s attention has quickly turned to the vote’s implications for the future of the Irish republic. Now, at a time when Ireland has been beginning to enjoy relative economic and political stability, Brexit is threatening to undo decades of hard-won progress.
Despite efforts by the governments of the UK and Ireland to reassure their own populations, as well as the international community, that Brexit won’t threaten the fragile peace in Northern Ireland, there is already cause for concern. The campaigns themselves highlighted the communal divide at the centre of Northern Irish politics, as the unionist DUP campaigning strongly in favour of the UK’s exit from the European Union and the nationalist party, Sinn Fein, opposed it. With the republican leader, Gerry Adams, calling a Northern Irish exit from the EU a “hostile action”, on the part of the British government, these underlying tensions seem at risk of boiling over in the event that community demands are not met. Given the Republic’s strong investment in the Northern peace process, any such deterioration of the peace would pose a grave threat to Ireland’s economic and political stability.
Similarly, the UK’s exit from the common market will throw into the balance another pillar of Irish stability, its economic relationship with the United Kingdom. Ever since the UK and Ireland joined the European Economic Community together in 1973 the principles of free trade enshrined in their membership of the common market have fostered a strong economic relationship. Today, the United Kingdom is the second largest destination for Irish exports. Now, as Britain seems destined to leave the single market, the prospect of restored trade tariffs and customs procedures threatens this economic status quo. This effect will only be worsened by the continuing devaluation of the pound, with Ibec suggesting that Irish exports to the United Kingdom will fall by 0.7% with each 1% fall in the value of the pound. The combination of these factors risks creating a perfect storm of economic pressures, threatening the Anglo-Irish trade relationship and risking hundreds of millions of euros worth of exports and thousands of Irish jobs in the process.
In spite of these challenges, Irish policy makers have still expressed optimism over Ireland’s future in a post-Brexit world. Structural advantages including low tax rates, the English language, and developed financial and pharmaceutical infrastructures look poised to attract significant interest from firms looking to move their European base from London. It has been suggested that these prospects could provide up to 20,000 jobs in the financial sector and even more across the wider economy. Combined with the potential increase in Ireland’s standing within the EU, a status that could be insured if it secures a greater role in these sectors, the influx of new industries could provide an opportunity for the further development of Ireland’s economy. Moreover, the improved bargaining position given by these factors could prove invaluable in Ireland’s conflicts over its low tax rates with EU authorities.
Ultimately, Ireland’s post-Brexit future will rest on its ability to assert itself in the negotiations that will decide Britain’s relationship with the EU and the nature of the Union itself in the coming years. If Ireland is to protect the economic and political stability that it has worked so hard to achieve it will need to fight to preserve the pillars on which that prosperity was built, both in the UK and the EU.
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