The case for pessimism: out of date?

The great advantage of a blog like this from my point of view is that it provides me with an archive of things I have written and said over the years that don’t end up on my cv. And so this is a post written primarily for my own benefit, linking to an article I wrote for the Irish Mail on Sunday in the week after the UK triggered Article 50 (there wasn’t an online version available at the time).

I was pretty pessimistic back in April — perhaps overly so. Since I was focusing on the British side, how could I not have been?  On the other hand, if I were writing the piece today I would place less stress on the economics, and more on the politics of the Border. That greatly limits the range of acceptable outcomes — but who is to say that the Irish government won’t succeed in its efforts? The recent EU paper on the subject is gratifyingly hardline in its approach to the issue: the language relating to avoiding “a hard border, including any physical border infrastructure” is exactly what we would have wanted, and has probably not been sufficiently commented-upon in Britain, ruling out as it does the Canada-US and Norway-Sweden options that some Brexiteers seem so keen on.

Since time is running out, and bespoke transitional arrangements are even less obtainable than they were a year ago, the most plausible and realistic way for the UK to avoid a cliff-edge would seem to be a transition involving the status quo, more or less.* That would kick the border issue into touch for a couple more years: and once we get to that stage, who knows what might eventually happen?

*Although I do still think that the cliff is a possibility, for the reasons stated in that column or here (sorry, more self-archiving).

Pre-Budget Statement from IFAC

The Fiscal Council’s offering in advance of Budget 2018 can be read here.

Could Ireland credibly threaten to veto an EU-UK trade deal?

For years now, Ireland and the UK have been the best of friends. Very sadly, Brexit is placing the relationship under strain. The positions of the two governments on the Irish border could not be further apart. Ireland is very clear: no trade deal that involves a physical border is acceptable. That obviously implies that the United Kingdom should seek to remain within the European Economic Area, and form a new customs union with the EU.  This would replicate its existing trade ties with the bloc, while respecting the vote to leave the EU, and avoid the need for a border within Ireland. The United Kingdom, on its part, is adamant that it must leave the customs union in order to strike separate trade deals with the United States and other countries overseas.  To be sure, it pays lip service to the importance of avoiding a border between Northern Ireland and the Republic, but this appears to be nothing more than a cynical manoeuvre. On the one hand, the magical unrealist tendency within the British government appears to think that by talking up the border issue, they can undermine the EU customs union, which has been defined by a common external tariff barrier since the 1950s. This would allow the UK to have its cake and eat it. On the other hand, the lip service will, they hope, allow the UK to place the blame for the consequences of its own decisions on Ireland and the rest of the EU.

What, if anything, can Ireland do?  As has been noted recently, the country is not powerless. While the withdrawal agreement between the UK and EU will be decided by qualified majority vote, Ireland does have a potential veto in at least two possibly relevant circumstances. First, it would have a veto should the UK seek to extend the two-year deadline for exit following its Article 50 notification.  Second, and probably more to the point, if as seems likely the UK ultimately seeks an ambitious, “mixed” trade deal with the EU that includes provisions on, for example, investment, Ireland will have a veto on that as well.

The UK therefore has the power to give Ireland something that we want: the maintenance of a border-free Ireland. There are encouraging signs that some in Britain may now be moving in that direction, but they are not currently the ones driving British policy. And down the line, Ireland will have the power to deny the UK something that it wants: a trade deal with the EU that goes beyond tariff-free trade in goods, and includes the kinds of provisions on portfolio investment that would be of interest to the City. The question therefore is: can Ireland credibly threaten to use this power in an attempt to prevent the reimposition of a border on our island?

Continue reading “Could Ireland credibly threaten to veto an EU-UK trade deal?”

That 26% growth rate – from startled earwigs to stars in our eyes

Last year we were scrambling around in response to the impact of the 26.3 per cent real GDP growth rate that was the headline from the 2015 National Income and Expenditure Accounts (NIE).  So where do we stand one year on? Long post, with too much mind-numbing detail, below the fold.

Continue reading “That 26% growth rate – from startled earwigs to stars in our eyes”

Quality, Innovation & Learning in Irish Manufacturing Firms

The successful management of change is crucial to firm survival and success. Many firms have responded to the challenges they face by incorporating quality-based strategies to their change management approach. A commitment to quality can drive firms to make significant improvements in profitability, productivity and competitiveness. A recent paper of mine, co-authored with Prof. Stephen Roper, Warwick Business School, examines the impact of introducing quality improvement methods (QIMs) on firm innovation in Irish manufacturing plants. Prior studies have been based on cross-sectional analysis making causality difficult to identify, and providing little information on the nature of the learning effects and lags involved in QIM adoption and its potential benefits for innovation. We ask whether, and over what period, the adoption of QIMs (e.g. ISO9000; Total Quality Management; and Quality Circles) impact on plants’ innovation success. Our empirical analysis reveals short-term disruptive and longer-term beneficial effects of QIMs on product innovation performance. In addition, the organic versus mechanistic nature of QIMs has some bearing on this temporal relationship. Empirical findings also highlight the role of complementarities and learning-by-using effects in shaping the quality–innovation relationship. The adoption of QIMs has significant implications for plants’ product innovation outputs, albeit with some time lags as internal routines are optimised. Quality improvement strategies and implementation plans need therefore to consider their innovation implications and any consequent impact on firm performance.

Full paper can be accessed here.