ACCORDING to Prime Minister David Cameron, speaking ahead of next Thursday’s referendum on Britain leaving or staying in the European Union, if it leaves the EU, ‘the only certainty is uncertainty.’ And, it looks as if Ireland would suffer the most from the fall-out of such an eventuality, according to US-based global credit rating agency Standard & Poor’s.
Having analysed how 20 countries who trade with Britain would be exposed by a ‘Brexit,’ S&P came up with what they called a ‘Brexit Sensitivity Index,’ which indicates that Ireland and other small open financial centres lead the list of sovereigns vulnerable to a UK decision to exit the EU. Along with us, Luxembourg, Malta, and Cyprus are ‘on the frontline of economies susceptible to any trade and migratory aftershocks,’ while countries outside of the EU that could also suffer include Canada and Switzerland.
The S&P index was derived purely from an analysis of the countries’ current financial links with the UK economy and states that it ‘does not reflect the potential political and market aftershocks of Brexit,’ which could make things a lot worse.
The UK economy is the fifth-largest in the world, but runs a current account deficit of 5.2 per cent of GDP, which is the world’s second largest in absolute terms at an estimated £96 billion, the report states. An inevitable drop in the value of sterling against other international currencies, if leaving the EU is the referendum outcome, would further weaken the UK’s position and, from Ireland’s point of view, there would be a consequent damaging effect on our exports, which have been the main driver of our economic recovery to date, as well as a threat to our credit rating.
There is already some economic uncertainty on the basis of the referendum being held in the first place and this is being added to by the latest opinion polls showing the leave side edging ahead of the remain camp, which must be setting off alarm bells in Downing Street and all across the European Union. A ‘Brexit’ could lead to other big players in the Union re-assessing their place within it and it would not take much to spark a wave of populist anti-EU sentiment, as there always seems to be a latent undercurrent of resentment in every country to the unelected Eurocrats who have so much influence on our lives whether we like it or not.
David Cameron is taking a huge – many might even say crazy – political gamble by having this referendum, mainly to appease a rump of nagging euro-sceptics within the Conservative Party. Making that promise ahead of last year’s UK general election was one of the factors that helped his party secure an overall majority in Parliament for the first time in 23 years, so he had no choice but to make good on his pledge to have that referendum.
However, not unlike our Taoiseach Enda Kenny’s failed attempt to have Seanad Éireann abolished through a referendum three years ago, Mr Cameron – who would prefer to remain in the EU on the more favourable terms recently negotiated by him – finds himself fighting a more uphill battle than he bargained for. A lot of the leave side’s arguments are harking back to the might of the British Empire and advocating a return to a more insular UK as they feel it will be better able to deal with issues such as immigration on its own rather than as part of the EU.
It seems that the more world leaders and former prime ministers of all political persuasions David Cameron rolls out to encourage the UK electorate to remain in the EU, the more suspicious they become about their motives. Like here, the distrust of the political establishment is growing in the UK, making it very difficult to get people to accept sound, reasoned arguments in the midst of all the scaremongering being put out about the EU.
The Taoiseach, along with various ministers and people in the business community, have been trying to get the message across to Irish people and to business associates in the UK of the importance of their remaining in the EU and are hoping for the best from their point of view. However, given the uncertainty and difficulties a vote for Britain to leave the EU would create for Ireland – which could be a distinct possibility – our government needs to have a ‘Plan B’ ready to deal urgently with such an eventuality.
The outcome is out of our hands and it is the will of the British electorate that will prevail on Thursday, June 23rd. All we can hope for is that the head will rule the heart when it comes to making that big decision.