The UK's decision to quit the European Union has opened the debate about whether an Irish exit would bring business benefits to the country
This article was first published in the June 2017 Ireland edition of Accounting and Business magazine.
Eurosceptism has long been a big part of the UK’s political scene. Not so in Ireland, which has adopted a more genuinely European outlook. Yet political pundits are saying the unthinkable – and ‘Irexit’ is being discussed.
The Financial Times’s influential columnist Wolfgang Münchau put it particularly clearly at the end of last year. For him, the concern was also the moves by the European Commission to clamp down on the use of Ireland by corporations such as Apple to minimise tax payments. ‘Perhaps the confluence of Brexit and the long-term loss of a business model will persuade Ireland to follow the UK out of the EU,’ Münchau pondered in the newspaper last year.
Statistics produce their own case supporting this argument. Ireland is unquestionably the EU member state most affected by Brexit, with a third of Irish imports coming from the UK and a sixth of Irish exports heading in the other direction. The value of trade between the two nations is around €50bn a year. A detailed study of the trade flows between the two countries has been commissioned by the Department of Jobs, Enterprise and Innovation and is due to be published before the end of the year.
The character of Ireland’s international trading relationships means that it makes sense for Ireland to follow the UK out of the EU, claims Jeffrey Peel, managing director of Quadriga Consulting and a well-known libertarian political commentator in Northern Ireland. He recently took his case to Dublin, where he was a platform speaker at free-market thinktank Hibernia Forum’s conference on the impact of Brexit and Trump.
‘Ireland is increasingly dependent on non-EU markets,’ points out Peel. ‘When the UK leaves the EU, Ireland’s two biggest export destination countries will be outside the EU: the UK and US. It makes as much sense for Ireland to leave the EU now as it was for it to join the EEC [European Economic Community], with the UK. Now Ireland is a net contributor to the EU budget there seems little sense for it to remain.
‘Ireland’s economy is intricately linked with the UK – the world’s fifth largest economy,’ Peel continues. ‘Ireland’s membership of the eurozone has put it at a significant disadvantage since sterling devalued post-referendum. Pegging to sterling and leaving the customs union with the UK would make sense given the dependence of the Irish agri-food sector, in particular, on UK trade.’
Anthony Coughlan – director of the National Platform EU Research and Information Centre and associate professor emeritus in social policy at Trinity College, Dublin – is another outspoken EU critic who is demanding that Ireland’s commitment to the EU be questioned. ‘Although the republic’s trade patterns have diversified since 1973, the English-speaking markets of the UK, North America and elsewhere are still more important for it than those of the EU without the UK,’ he argued in a recent polemic for the BrexitCentral website. Coughlan stressed the logic of Irish departure, given that the reason the country joined was the importance of trade with the UK and the desire to avoid a ‘hard border’ with Northern Ireland.
Former Irish ambassador to Canada, Jamaica and Bahamas, Ray Bassett, has also joined the debate. ‘The Irish state faces a momentous decision in the wake of the Brexit vote,’ he wrote in Northern Ireland’s News Letter. ‘That decision will shape its future – to decide whether to continue to be part of “Team EU”; or alternatively once the UK leaves, that its future lies more with the North Atlantic Anglophone world.’
PwC’s managing partner in Ireland, Feargal O’Rourke, has been a leading figure in making the case for Ireland staying in the EU, not least through a prominent opinion piece in the Irish Times. He tells AB: ‘An overwhelming majority – 94% – of Irish business leaders confirmed in a PwC business leaders survey that Ireland should not follow the UK and exit the EU. Since 1973, Ireland has benefited hugely from its EU membership in terms of jobs and economic wealth for all of our citizens and it would simply make no sense for Ireland to exit the single market.
‘I fully agree that Irish businesses, and, by extension, “Ireland Inc”, do need to consider the implications of Brexit and plan accordingly. However, in my view that must be in the context of Ireland remaining part of the EU, leveraging the certainty this provides including our euro exchange rate, along with the myriad membership benefits, such as markets, tariff-free trade and people mobility. Although Brexit will present challenges for many Irish exporters, it will also present opportunities to become even bigger players in the EU.’
O’Rourke believes that exiting the EU would impact on Ireland’s ability to compete on a level playing field within the single market. ‘In the absence of new trade agreements, potential border tariffs would likely make our products and services into the EU more expensive as additional costs are passed on to the consumer,’ he says. In addition, O’Rourke adds, duty imposed on imports into Ireland would create a real cost for Irish businesses. ‘We also have a thriving foreign direct investment sector,’ he continues. ‘Many multinationals have located to Ireland on the basis that they can get access to this single market – much more so than is the case with the UK – and, post-Brexit, Ireland will be the only English-speaking country in the EU. Then there are the implications on workforce mobility.
‘I have no doubt that the debate of Ireland remaining in the EU will rear its head again over the next two years,’ he concludes. ‘Many Irish businesses have come through the worst recession and have shown great resilience. I have no doubt that with our natural strengths and agility, Irish business will navigate the challenges that Brexit will bring, but importantly as part of a wider EU community.’
Although the debate has been triggered, the truth is that there is little evidence of public support for an Irexit in the wake of Brexit. While there are campaigns with a presence on Facebook, Twitter and elsewhere urging the country to leave the EU, they have few followers. Indeed, a Eurobarometer survey of more than 1,000 respondents last November found just 25% favouring an exit, compared with 67% rejecting the idea. This makes Ireland one of the seven EU member states most committed to retaining its membership – despite the looming departure of its closest trading partner. Significantly, while freedom of movement was probably the deciding factor for Brexit, some 90% of those surveyed in Ireland favoured the policy, compared with 81% in the EU as a whole.
Unless and until one of Ireland’s mainstream political parties argues for Irexit, there seems little realistic prospect of the unthinkable actually happening.
Paul Gosling, journalist
"Ireland's membership of the eurozone has put it at a significant disadvantage since sterling devalued post-referendum"