NOW that British Prime Minister Theresa May has set out her rather hardline initial negotiating stance ahead of triggering Article 50 of the Lisbon Treaty next month to start the process of Britain leaving the European Union, the Irish government should surely be able to formulate a comprehensive plan to deal with the threat Brexit poses to us. Already, our food exports have been adversely affected as a result of the drop in value of sterling against the euro.
Indeed, there is a real danger of contraction of the Irish economy as a whole as Brexit has the potential to affect us a lot more than any other country in the EU. First and foremost, we need to work closely with the remaining member-states of the EU to understand what kind of outcome they are aiming for and to try to ensure that this is not going to damage our strategic interests.
Already, we took a bullet for the EU when our taxpayers were forced to pay for the bailing out of our banks in 2008, racking up a mountain of sovereign debt – which has not gone away – followed by the ignominy of Ireland, in turn, having to be bailed out by the EU-IMF-ECB troika being forced upon us. The EU owes it to Ireland in its negotiating strategy with Britain not to sell us out again and to ensure that Britain is not given any sort of favourable trade deal that would make it more worthwhile for them to leave the EU than to stay in it.
Put quite bluntly, there must be more pain and no gain for Britain in its dealings with the EU as a result of its decision to leave the Union. We cannot have a situation where we become the whipping boys of Europe again.
There are special circumstances here and, if the British, as outlined by Theresa May, go ahead with their stated intention of leaving the Customs Union, it would inevitably affect trade between Northern Ireland and the Republic, and damage economic relations between the United Kingdom and Ireland. This would also lead also to the return of a ‘hard’ border between the Republic and the North and set back all the progress made since the Good Friday Agreement, which both the British and Irish governments must ensure is respected in the Brexit negotiations.
The Republic of Ireland will share the only land border between the EU and the UK and this will have to be heavily policed at the northern side in particular if they want to regulate the movement of immigrants into the UK. This would adversely affect residents in border areas who live and work at either side and do business across it.
What is most worrying is an assessment given by Department of Finance officials last month to the Oireachtas Finance Committee on the likely effects of Brexit on the Irish economy in the light of Theresa May’s statement of intent. It estimates that Ireland’s economic output would reduce by 3.5% over five years, resulting in 40,000 less people being employed, an increase of the national debt by €20 billion and a reduction in exports to the UK by about a third.
This would set back our economic recovery and does not augur well for the prospects of any significant tax cuts or pay increases for Irish workers for the foreseeable future. Public sector pay talks will need to reflect the harsh realities for all of us of Britain’s ‘hard’ exit strategy in leaving the EU, as we must be prepared for the worst-case scenario.
How we can be properly prepared for this is a worry also in the light of the admission to the Oireachtas Finance Committee by the Department’s chief economist that its Brexit unit comprises just four people and its secretary-general also revealed that overall staffing levels in the Department of Finance are about 10 percent below what they need to be.
Taoiseach Enda Kenny has appointed himself as the person in government taking overall responsibility for dealing with the Brexit negotiations and their potential fall-out. However, we have no sense yet that he is on top of his brief in this regard and there still seems to be a lot of making it up as he goes along.
It is too important an issue for running with the hares and chasing with the hounds. He needs to show more focussed leadership in order to inspire confidence that our interests will be properly looked after, primarily by the EU, when the Brexit negotiations start in earnest.