October 29, 2017 by Paul Goldsmith
At some point the people of Ireland are going to have to choose between Britain and the EU. There are plenty of reasons why they might go with Britain. They are geographical, economical and political.
The 30th of March 2019 marks a unique point in the joint lives of the United Kingdom and the Republic of Ireland. It will be the first time in their history that one has been inside the EU and the other isn’t. Before 1st January 1973 they were both outside what was then the European Community, which meant they were free to decide on their own arrangements with each other. From that date they were both inside the EC and then EU, meaning they were both in the Customs Union and then the Single Market.
After Brexit, assuming the UK leaves the Customs Union and the Single Market, numerous problems will arise, and whilst some of them will affect the UK, far more of them will affect the Republic of Ireland. The cumulative impact could destroy the country’s finances in such a way that they might find themselves with the choice of relying on continual EU and IMF bailouts whilst inside the EU or leaving the EU and tying themselves in with the UK, maintaining the arrangements that have always been their lifeblood.
In the UK, the way Ireland’s economy works only tends to come into focus when we hear about their tiny corporation tax rate (12.5%) and the draw that these arrangements are for large tech companies like Apple and Google to locate their European headquarters in Dublin. But during my recent week in Ireland I discovered far more about just how connected the two countries are, and how two particular industries – agriculture and finance – are so reliant on the UK that I can’t see how Ireland can be in if Britain is out.
I’ll start with financial services. Financial services companies can operate anywhere inside the EU under what are known as ‘passporting’ rules, which are essentially a series of regulations that apply to everyone operating in the industry within the EU. This ensures minimum standards of service, security and similar ways of working that makes it possible to move money anywhere needed and compete fairly. British companies have billions of pounds in the Republic of Ireland because of this concept of passporting.
When the UK leaves, if they are no longer part of this system, those billions will probably be repatriated to Britain, because moving them back and forth to Ireland will become much harder. This would decimate the Irish financial services industry. Because Ireland is in the EU, it would not be able to make a separate deal with the UK to keep this going. So Ireland’s financial services industry would need Britain to be either in the EU with it, or outside with it, rather in the different positions they would be in.
But the problems in financial services are nothing compared to the problems that will occur in agriculture. Agriculture, remember, includes both crops and also livestock. Crops go off, so it is better if they are be exported to countries that are near, and quickly. If the UK leaves the Customs Union, that would mean a massive administration barrier, expensive in both time and money, would be created for Irish agriculture.
To give two contrasting examples: there is a Baileys (Irish Cream alcoholic drink) bottling plant in Mallusk in Northern Ireland, making 60% of all the Baileys prodiced. The plant relies on the Republic of Ireland for its milk. Brexit could mean that milk has to be stopped at the border and might have tariffs on it, and suddenly both the Baileys plant and the Irish dairy farmers might not be able to operate. Second example is the transfer of horses, particularly for events like Cheltenham. At the moment they travel on lorries and ships and can pass through Britain easily and unimpeded. Britain leaving the Customs Union makes that a lot more difficult.
Again, it’s not like Ireland and the UK can come up with a special arrangement for these things. Ireland need to abide by whatever deal the EU negotiates.
Of course, I haven’t even mentioned the largest elephant in this particular room – the border between Northern Ireland and the Republic. That’s because my conversations with people in Dublin suggests that they barely want to consider what would happen if a hard border re-appears, yet they simply do not see what on earth is the alternative if Britain is leaving the Customs Union.
All of this made me realise that whereas my original thought was that at some point there could be a referendum to unite Ireland, I think instead there will soon need to be a Referendum in Ireland’s EU membership. The uniting referendum had seemed possible given the problems Brexit would cause and how the people of Northern Ireland, even the Unionists, must have noticed that they were ignored during the Referendum campaign and again during the 2017 election.
But I wonder, given the problems I have talked about above, given the fact that the Republic of Ireland sees people drive on the same side, sees the same plugs being used, and speaks the same language as the United Kingdom, whether it makes more sense for the Irish people to put themselves wherever Britain are once Brexit is finished?