The election of the majority Conservative government in May meant that a referendum to decide whether Britain remains part of the EU became inevitable. A commitment to an “in-out” referendum on EU membership was provided in the May Queen’s Speech and it will likely go ahead in 2016 (or 2017 at the latest). Opinion polls show a split electorate. Risk aversion and other status quo factors should work in favour of the “stay” side. Bookies odds reflect this with at least one popular bookmaker placing the odds of a “leave” result at 3-1. In any case while the likeliest outcome at present is that Britain will remain in the EU, it is still a strong possibility they will leave and worth discussing in terms of implications for Britain and other countries. Germane to the title of this blog the implications for the Irish economy broadly are worth discussing.
In the draft national risk assessment published by the Taoiseach’s office earlier this year, Brexit is mentioned as follows:
“Following the general election in May, the British Government is likely to make proposals both on how the functioning of the EU could be improved and on how specific UK concerns about EU membership could be addressed, with the possibility of a UK referendum on EU membership. A fundamental change to the role of the UK in the EU, or a period of continuing uncertainty regarding the UK’s relationship with the EU, could present significant challenges for the EU as a whole and for Ireland in particular, especially in terms of (i) pursuit of Ireland’s objectives as a Member State as the UK is an important ally within the EU on negotiations on issues of mutual concern such as trade and the deepening of the single market; 24 (ii) bilateral relations with the UK, including the significant economic and trading relationship; and (iii) the impact on Northern Ireland issues and North/South relations.”
A number of questions come to mind in the prospect of Britain leaving the EU. I raise these purely for discussion and they are not ordered by any degree of likelihood or priority. In the event of a “leave” vote a number of alternative configurations might result including various forms of trade deal with the UK and EU members. (See here for one attempt to answer some of the economic questions below; Davy’s also released a piece on economic effects; NTMA piece on economic effects here; Alan Matthews on the implications for Irish agri-food).
a) What are the implications for border arrangements between Northern Ireland and the Republic of Ireland?
b) What are the implications for the status of UK citizens living in the Republic Ireland?
c) What are the implications for Irish citizens living in the United Kingdom?
d) Will the uncertainty surrounding the referendum affect currency volatility?
e) How will the uncertainty surrounding the referendum impact on FDI into Ireland? Does the prospect of a Brexit make Ireland a safer destination for some types of companies relative to the UK? In a “leave” scenario would Ireland be more attractive a destination than the UK for non-EU companies looking for access to the EU market?
f) How would a Brexit influence trade between Ireland and the rest of the EU?
g) What implications would Brexit have for the Scottish political situation and potential knock-on effects to the Irish economy?
h) What implications would it have for support for the EU in Ireland?
i) How would a “leave” result influence the Northern Irish economy?
j) Would a “leave” result limit mobility of Irish people to the UK?
k) What implications would a “leave” result have for wider political movements in Europe?
The small amount of publicly available analysis so far suggests the answer to most of the economic questions is that it would have a negative impact on the Irish economy largely coming through trade disruption. But it seems clear there is a lot of uncertainty in what a leave scenario would look like. As reported widely in the media there are now various groups in Ireland looking at these questions including in various state agencies and the Central Bank. It will be interesting to see this debate unfold.
32 replies on “Brexit and Ireland”
Debate on this topic is, undoubtedly, overdue. The difficulty is that Cameron has yet to spell out what exactly the UK is looking for in the matter of re-negotiation of the terms of UK membership the outcome of which, if satisfactory, and by definition, must lead him to recommend and campaign for a yes vote (unless he emulates the Greek PM who appears to have invented a novel approach in the matter of referendums).
The outcome of these negotiations might also impact Ireland, even in the event of the UK remaining a member of the EU.
The previous UK government carried out an extensive series of “reviews of competences”, presumably to try and firm up what exactly Cameron is looking for, other than to placate the right wing of the Conservative party. These reviews largely confirmed that the general position was satisfactory from a UK point of view, which is hardly surprising as the UK played a major role, if not the major role, in defining the division of competences in question during the lengthy negotiations which eventually gave rise to the Lisbon Treaty.
The “reviews” seemed to have been largely, and conveniently, forgotten. They are, however, available on the FCO website and a source of considerable detailed information for those interested.
Anyone familiar with the machinations of Telecom’s regulation (and not sure I would wish that on anyone!) can identify with many of the concerns extolled by the euro-skeptics in Britain. Boring as it may be, it gives an excellent insight to the Commissions attempts to legislate through ‘stealth’ where existing treaties do not quite give it the absolute power it aspires to. It is a creature of ambition and its quest for greater power should not be ignored.
As a case in point I refer you to a recent court action in the Irish High Court. In telcoms for several years now where the Commission has felt itself to be constrained from directly intervening with the workings of the National Regulatory Authorities (ComReg in Ireland) it adopted the pseudo legal but powerful artillery of “Recommendations” to overcome its dearth of explicit powers. The extent to which such Recommendations have been adopted across the EU is virtually without exception by the autonomous state regulators who are enthral to the Commission. Ignoring a Recommendation in taking account of national circumstances or in following the remit directed by sovereign governments is simply a non-runner. The extent to which NRA’s face this sort of bullying pressure from the Commission was captured well in a recent judgment by Mr. Justice Cooke in the Irish High Court in Vodafone v ComReg. While the facts of the case are secondary to the debate at hand here, what was clear from the proceedings was that ComReg took its cue almost entirely from what the Commission told them ought to be the situation, they abdicated their autonomy in the face of “a recommendation they could not refuse”. Justice Cooke noted as follows:
“It is…evident that in enacting the [Telecoms] Directives in 2002 and subsequently amending them, the Community legislators have deliberately struck a particular balance in the allocation of powers and duties for executive implementation and administrative supervision as between the European Commission on the one hand and the NRAs on the other. It is therefore important to have regard to the particular roles accorded respectively to the Commission and the NRAs under the legislation and to the precise scope and limits of the supervisory function allocated to the Commission…..While the legislators have obviously gone a long way in authorising the Commission to exert considerable advisory and administrative pressure on NRAs…they have deliberately stopped short of authorising the Commission to enforce…its view that the NRA’s… measure could create a barrier to the single market….This distinction is not a mere procedural formality but derives from a fundamental constitutional feature of the European Union itself……Thus, by defining the functions of the Commission in relation to the powers of the NRAs to impose price control measures as exercisable by means of a recommendation only, the legislators have explicitly restricted the authority of the Commission vis-à-vis the NRAs to one of advisory character, albeit one backed by formidable procedural and administrative imperatives.”
In short the Judge made it clear that the Commission’s power do not extend to enforcing its will on the regulator. It was ComReg’s defence that they were all but obliged to take a particular position with respect to issue in dispute with Vodafone. And ComReg weren’t being disingenuous – they can see the wood from the trees.
While in this instance, the judgment was a victory for citizens insofar as it clearly drew the line as to where a sovereigns powers of legislation can be impinged upon in accordance with existing treaties, it is well known in Telco circles that the decision has many in the Commission seething with anger simply because a judge has simply spelled out what is already clearly laid out in treaty.
And while they were checked on this occasion, what is very clear is that for years other supposedly “autonomous” agents of the state like ComReg are clearly being forced to make rules and issue decisions under the iron thumb of the Commission masters. This is centralised legislation through stealth and bullying. Yes the sign off has to come from state appointed Executives in these agencies but these are people, often senior civil servants, that are unwilling to do anything that might blot their copy book in terms of career advancement….and p*ssing of the Commission certainly falls into that category. There is more than one way to skin a cat – and if the Commission cannot do it through democratic means it has other tools at its disposal – in the case of telecoms its through “Recommendations”. I seriously doubt it is the only sector where legislation through stealth/bullying is flourishing.
If the UK leaves the EU, it is in Ireland’s interest to make sure the UK gets most of the advantages of EU membership nonetheless, esp on trade and investment. On free travel, the Ireland Uk arrangement predates the EU and would likely continue after it too, for Irish citizens at least.
Perhaps the most significant problem for Ireland would be the removal of a voice in favour of liberal capitalism within the EU’s rule-making process, so that policy-outcomes would more contain more e.g. French and Italian policy-thinking, more protectionist and favouring insiders. Not much can be done about that however! Perhaps more pre-policy coordination with the Dutch might help?
IF the English leave, I would follow. I see no reason why we would stay in with the Athens of the North.
You are correct in your assessment. The link I provided above demonstrates (i) that the threads that bind the UK to Europe are myriad and cannot be broken and (ii) “there is fog on the Channel and the Continent is isolated”.
This fog is centuries old and not about to dissipate. Although the millions of UK citizens enjoying a “Place in the Sun” are on the right side of it.
The UK will follow any lead but not one defined by Germany. The misfortune is that there is a mistaken assumption in the UK that there is such a lead, as illustrated by the link above. There isn’t!
The Irish State is not yet mature enough to stand on it’s own two feet and plot it’s own course.
You mention the EU Commission telling Ireland what to do.
What about various unaccountable, unelected UN commissions which enjoy telling the Irish Govt what to do?
Recently there was a article in the Independent about Oberstown house, and the carnage which is ongoing there. Oberstown House was apparently created because various outside unelected, unaccountable organisations objected at how the Irish Justice system dealt with criminals under 18 years of age. Now we have extremely dangerous juveniles (who are products of the failed liberal culture) who are ruling the roost.
The Irish always have had outside influences telling them ‘what to do and how to do it’, and they always will.
The priority of the mandarins who guard / massage various ministers is the optics, it is always the optics. These guardians will do anything for that extra potato and a pat on the head.
The fact that the rest of the population is living in fear and suffering crippling taxes is of course irrelevant.
UK not blind to who was calling the shots during euro crisis. Germanic interest trumped all other and the KPIs from trade surpluses to dramatic reversals in unemployment rates speak for themselves. Germany have had to scramble with the institutions for complete dominion but they’ve taken a big chunk of it. It appears to me that what the Brits are after is a dissolution or softening of the second strand of power, Brussels, and this is something the Germans may be willing to accede as long as it does not fetter their control over the euro zone….but the undemocratic institutes won’t surrender easily and my money would oppose the bookies on the likely course of action by the citizenry.
The truth may ultimately reach the masses. Forget all the ideological chat….u really don’t have to look far beyond the Figures to find the truth…..imagine how well Germany would be doing if they weren’t so distracted saving everybody’s ass?
I don’t disagree with you. But you have to hope if you keep challenging the status quo you might institute change. FG had promised political reform and the public clearly told them we want to start within the Seanad (and clearly no the abolition of the same) they have sat on their hands and done nothing. According to the opinion polls they will pay a price for that belligerence – there is not much noise about it now but I think political reform will again come to the fore in the next election and FG will be scratching their head asking themselves how did we manage to slip up on that easy win this last 5 years!
Not to put too fine a point on it, but a lot of events taking place next year will be based around Irish people 100 years ago who believed the exact opposite.
Anyone really think it totally implausible that the EU has paid lobbyists posting (relentlessly) on blogs like this?
I hope you forgive me a bit of a diversion.
I’m sure I’m not the first to think it but what about the Irish state going for a dual currency economy?
Is it legal for the Irish government to accept Sterling as well as euro for settlement of taxes?
Or does the Euro come with an exclusive clause.
My thinking is that such a move could be sold to Europe as a peace building exercise with Northern Ireland. With the Northern Irish government accepting Euros for settlement of taxes in return.
This would be a good hedge against future euro failure. Avoid all the panic. Also provide leverage in any future euro crisis. After all the Greeks caved in because changing back to Drachmas was seen as too great a risk.
By the by, where is JTO? I would have thought he’d be all over this thread.
Also, what’s with the painfully slow moderating on Irish economy these days?
The likelihood of Brexit is high but with Germany having its second-highest merchandise trade surplus with the UK, the latter will not be left high and dry.
China, US and UK are the most popular locations for FDI by big companies and Osborne would likely cut the corp. tax rate to 15% or even 12%.
It’s 30 years since Jim Hacker the TV character becomes prime minister after a campaign to save the British sausage from Brussels red tape and while some Brits maybe confused as to whether Europe wanted to ban bent or straight bananas in the past, the negative focus has taken its toll over the decades. Then there is the migration issue and Ukip in May won the support of some traditional Labour supporters.
Nocense above brings to mind trees and forests in citing “bullying” by the Commission — it’s common of course to ignore the good.
As for Germany as the bogeyman, despite the drop of almost 20% in the value of the euro vs. the dollar, China and the US are the top two of the most competitive of 10 manufacturing nations.
Germany is 9th after France at 7.
The naifs want to have German trade restricted, which would be a gift to the rest of the world. 🙄
At times I thought you might be in the pay of the EU but those austerity skinflints would baulk at the expense.
@ That’s Legal?
Interesting idea! If accepted, the immediate consequence probably being that the credibility of Ireland’s participation in the euro is shattered.
Tsipras has signed up to this new deal because he knows that the Greek electorate knows that the game is up. Collecting your 60 euros a day at your local bank is about as big a wake-up call as can be imagined.
The new deal will work because there is a majority in the Greek electorate that wishes to be rescued from the situation in which they feel they have to game a corrupt system simply because everyone else is doing it. Tsipras hopes to harness this sentiment politically. Capital controls, that will last until the Greek Central Bank, as part of the European System of Central Banks, has re-established, with bailout help, sufficient confidence in the Greek banking system, constitute the fundamental changed element in the political mix as compared with previous Greek bailouts.
There is little or no recognition of this in commentary in Ireland.
The position of the UK is one of near total isolation. It must be assumed that Merkel and Sarkozy called Cameron’s bluff at the December 2011 European Council – blocking amendment to the treaties unless he go some immediate concessions – with such alacrity because they wished to go ahead in any case with an intergovernmental arrangement that put them in the driving seat. The consequences of this have yet to work themselves out and seem to me to represent by far the biggest danger of a Brexit occurring i.e. largely by accident.
“Nocense above brings to mind trees and forests in citing “bullying” by the Commission — it’s common of course to ignore the good.”
Am I take to take it from that that the bad is not in dispute therefore on the specific case raised?
The good is not what people are seeking to fix.
“The naifs want to have German trade restricted, which would be a gift to the rest of the world”
I’ve not seen a single poster on this site promote that notion. For my part I have merely suggested it is time Germany recognised the enormous benefit it has derived from a severely flawed currency union. It has been the major beneficiary of the Euro project and has the greatest interest in maintaining the status quo. The Euro crisis has not just not placed a burden on Germany but has delivered for it in spades – yet it still manages to paint a picture of it being the EZ saviour this last half decade or more. Of course you deny that “price” is a major factor in generating demand and it is all down to production nous and management.
If the EZ is a UNION then there needs to be a more proportionate mechanism for the fair distribution of “gain and pain” within the union…otherwise it is merely a fixed currency bloc defined by internal rent seeking in which Germany always holds the upper hand.
I don’t see why that would have to be the case. Can you elaborate? Is it legally impossible? Germany wouldn’t allow it?
Why can’t we work towards a functioning eurozone and have a contingency. Now that we are ‘semi core’ we would be looking to implement it from a position of strength, relatively speaking I mean.
It has been shown that the will of Germany, as the biggest creditor can be imposed on other members because no one can introduce a different currency over night. To try would be to destroy your economy.
There would be economic benefits too of course. Having the same currencies on the island of Ireland and sharing one with our biggest trading partner.
Put simply, one cannot ride two horses at the same time. It has not worked for the Greeks and it would not work for Ireland.
The commentariat here continues to analyse the Greek situation in terms of rather tired mental frameworks. It does not take much of a leap of imagination to see what the reaction in Ireland would have been had it been necessary to introduce capital controls. But it is a leap that is still too much for it.
Of more than historic interest in this context cf. the statement by the euro heads of state and government at the by now infamous December 2011 European Council.
The other element is the deepening of the actual management of the euro as a currency, especially the supervisory role given to the ECB which the participating countries should have given to it in the first place. A lot of grief would have been avoided had they done so.
cf. these article by Hugo Dixon of Reuters.
A voice of common sense IMHO.
Telecom liberalisation began in the US in 1948 and in the EU in 1987. In the latter it moved at a relatively rapid pace which was important with the advent of the commercialisation of the Internet — that is the key story.
Three countries account for 65% of Euro Area GDP and obsessing about Germany while ignoring the positions of France and Italy, does not make a coherent argument — Germany cannot bailout either of the others and the euro wouldn’t survive a collapse of either of them.
A significant fall in the German surplus without France and Italy taking up the slack would be damaging to the European economy — this is a process that could take decades and in the short-term, proposals from critics would not have a material impact. This is why I raised the issue of restricting German exports. It’s of course not going to happen, nor is the German savings rate going to significantly fall.
There is more detail here:
Germany’s Surplus: Lots of critics; Credible solutions scarce
On a transfer union, you want Germany to take the lead in setting up a transfer union? — without tax harmonisation?
Ireland did once get lots of handy cash mainly from Germany — 6% of annual GDP wasn’t to be sneezed at — and since 1973 we have to yet to pay a net penny or cent to the EU budget.
“Telecom liberalisation began in the US in 1948 and in the EU in 1987. In the latter it moved at a relatively rapid pace which was important with the advent of the commercialisation of the Internet — that is the key story.”
I genuinely have no idea how that adds to or counters anything with respect to the point I was making on the matter. What I can tell you is I am fully aware of developments in the european telco sector and much of what I see is cause for concern. In any case my central point pertained to federalist creep and more specifically federal creep by stealth contrary to the dictates and spirit of the treaties that were agreed agreed to democratic mandate – although one would have to question how democratic either Lisbon II or Fiscal Treaty were – if you put a gun to a voters head, does the tally grant a democratic mandate.
“On a transfer union, you want Germany to take the lead in setting up a transfer union? — without tax harmonisation?”
Are you for real….Germany took the lead on a transfer union some time ago – what do you think the USC charge is all about in your pay cheque? What do you think the delinking of the sovereign from private creditor bets policy that did not happen is all about?
“Ireland did once get lots of handy cash mainly from Germany — 6% of annual GDP wasn’t to be sneezed at — and since 1973 we have to yet to pay a net penny or cent to the EU budget.”
Your the man with all the data. In real terms whats our net cash position since joining the EEC/EU taking account of private debt we are now required to pay?
btw, my problem is not with the EU…its with the EZ.
This comment by Cliff Taylor of the IT, one of the best commentators around, illustrates the leap of imagination that still needs to be made by the Irish commentariat with regard to a country of the EA that places itself in the situation of having to introduce capital controls. The “stand-out” moment that should be first on his list is the weekend in which the Greek government was compelled by circumstances of its own creation to introduce them.
The countries of the Euro Area also seem to have recognised that they cannot both entice private investors and deter them at the same time.
Something is happening here but you don’t know what it is, do you, Mr. DOCM?
Corbyn in the UK, Podemos in Spain, Syriza in Greece, Bernie Sanders in the US: people are saying “enough” to the neoliberal assault on the public that has been carried out for the benefit of the 1%. The likes of Cliff Taylor and yourself will soon be among the only ones lacking the imagination to see an alternative to TINA.
But I have to take my hat off to you. As Orwellian rhetorical flourishes go, characterising the introduction of capital controls in Greece as something that the Greek government “was compelled by circumstances of its own creation . . . to introduce” is really some of your very best work yet. But, tell me, did those “circumstances of its own creation” include forcing the ECB to step far outside of its mandate so as to do the bidding of a handful of states?
Two links not entirely off topic in the sense that they deal with what is happening on the “Continent” while the UK seems set to continue examining its navel.
That the ECB should have failed to continue to force Greeks to take their money out of their own banks and replace it with that of European taxpayers, Irish included, is, of course, unconscionable!
The division of economic opinion in Germany remains!
N.B. The dissenting opinion by Peter Bofinger.
I’m actually really curious to know about the following question, as I’m sure plenty of others are as well:
“c) What are the implications for Irish citizens living in the United Kingdom?”
I’ve skimmed this discussion but haven’t seen anyone bring this up or comment on this part. Anyone have any thoughts on what these implications will be?
For anyone here who might be interested, a very perceptive take on the Euro Area:
In the context of the topic here it appears the political machinations in the Euro Area are feeding support for Brexit in Blighty.
The answer to your question appears to be a very complex one, if the relevant UK government “competence reviews” are any guide. This seems to be the most relevant one.
In summary, it would appear that any rights that exist on a bilateral basis, (and do not require mention for that reason) between the UK and Ireland e.g. common travel area, right to vote etc. would be unaffected but those that arose from EU membership would inevitably change, and dramatically, for all concerned, including for UK citizens living in other EU countries.
The competence review on asylum and immigration also comes into the picture. The UK, if it exits the EU, will be a third country like any other as far as the rest of the EU is concerned other than in terms of whatever agreements it may make in the context of negotiating its formal exit e.g. the participation of the countries of the Nordic Union in the Schengen Area which was agreed to allow three EU states – Denmark, Sweden and Finland – to maintain their free movement area with Norway and Iceland, but solely in relation to control of persons (elimination of passport controls) at internal borders. The UK, with Ireland in tow, did the opposite by staying out of Schengen.
The logic of those in the UK insisting on exit would appear to be based on the experience of countries such as Norway and Switzerland which have, in effect, a large measure of EU membership benefits without being actual members, and on negotiating a similar deal. What they are overlooking is the fact that these countries have little or no influence on how decisions impacting them are made. The latter will continue to be made by way of a supranational decision-making process which cannot be adapted to a form of intergovernmental agreement simply to suit one third country, however large.
Boris Johnson in Der Spiegel seems to be unaware of this.
The United Kingdom survived WWI and WWII by relying heavily on it’s dominions / dependencies / colonies of the British Empire. India, Australia, Canada, S.Africa, Egypt to mention just a few were large sources of mineral wealth and man power, which could be called upon to assist the UK motherland from external aggression in times of crisis.
Today the British Empire is no more, there is a scattering of various islands / dependencies (with the exception of British Antarctica) but no major mineral rich / manpower rich land blocks like India, Canada, S.Africa, or Egypt.
If the UK were to remove itself from the EU, it would become even more vulnerable to external aggression, it would have no empire to call upon to send manpower / mineral resources.
There is the fact of London / Washington alliance, membership of NATO which of course could be called upon if the UK (as we currently understand it) were to be attacked by a external force. But that may not be the case in 50 / 100 years time.
Getting back to the question of Brexit. I have not read any article which examines this question, why is it coming up? What is happening to the traditional nationalist, why are they thinking of isolation, what controls are they seeking to re-impose?
In my opinion, the British Identity is under treat from extinction from inside the UK.
Multi culture-ism has failed in the UK. Cultures which are broadly compatible have been able to embed themselves and be tolerated / accepted by the British native. One example being the Irish Community which has in general melted into the native society fairly well.
However some other cultures (of which I am not going to name) have not integrated well.
In certain parts of the UK, there is the possibility of serious civil war such is the level of differences which exist.
The traditional British native, who on going about their own society…. is now asking themselves a number of very serious questions
1) Who are these strange people?
2) What is this strange language they are speaking?
3) Why are they dressed in such strange clothes?
4) Why are they behaving in such a strange manner / custom?
5) Where is my country?
6) Where are my people?
I think it is ironic that these questions are legacy issues from the former British Empire, and not from the more recent EU.
However with the laws on labour mobility which are enshrined in the various EU treaties, these are now the target of native dissatisfaction.
While my comment may well be criticised as being xenophobic, or raising issues of xenophobia. That is not the point.
National identities are increasingly under threat not just in the UK, but there are issues of serious dis-satisfaction within France / Germany as well.
To ignore the feelings of national identity, issues of compatible cultures / incompatible cultures is to ignore human nature itself.
Regardless of how politically correct / politically incorrect it is to mention it.
I think you have identified a key driver of the Brexit debate but at government level there is growing frustration with a lot of the bureaucratic nonsense coming from Brussels too and implementation of legislation for legislation’s sake.
WRT the NI ROI border.
It would be easier and simpler to leave the border controls as they currently are at present.
However it would be more effective if more stringent control criteria be applied at all ports / airports from the Island of Ireland to the UK.
There is already enhanced co-operation between both jurisdictions, WRT sharing intelligence / drug smuggling / contraband / potential terrorist threats etc.
The new dual visa program (ROI + UK) would probably have to be scrapped however.