So much to lose, so little to gain: the consequences of Brexit for Northern Ireland
Northern Ireland stands to lose a lot if Brexit comes to pass… and gain little.
The three key arguments for the UK to leave the EU are well-known by now: the loss of sovereignty that comes with having to be “spoken down to” from Brussels, the lack of control over immigration and the burdensome bureaucracy
that has come to be associated with the Union.
The outcome favoured by pro-exit proponents would be for the UK to gain Euro Free Trade Agreement (EFTA) partner status or a special deal that hasn’t been done before. This may mean a border back around the UK, but the kingdom would still trade with the EU as a whole and simultaneously be free to negotiate bilateral trade agreements independently with whomever they want to. So what would be the consequences of Brexit?
As consequences of Brexit, the UK and Northern
Ireland would stand to lose all of the following:
In 2014, NI exported £1.6bn to the Republic, £1.5bn to the EU excluding the Republic and £3.2 billion to the rest of the world. Half of its exports found their way to their customers within the EU: it’s a lot simpler to transact within a single market than be outside of it. While a lot of North-South initiatives would persist, NI would have to bid adieu to many EU funding initiatives including FP7, PEACE III and INTERREG IVA, etc.
In addition, if the UK leaves the EU, then it also leaves the CAP, which would have a detrimental effect on Northern Irish farmers. Within the structure of an FTA, the UK would have to deal with the EU as a bloc and would have to battle alone against any Brussels-imposed diktats.
For example, one of the hottest topics at the EU table at the moment is TTIP, the EU/US trade agreement. Whatever side of the debate you might be on, there are consequences ff the UK left the EU. Its voice, loud and clear now, would diminish to a whisper on this matter, and the Northern Irish view would be but an echo lost in the ether. Is this the increased sovereignty that the UK is adamant it can’t get without leaving?
Switzerland has shown that total control over
immigration will not happen
As for more or total control over immigration, a free trade agreement with the EU (as we know it now) would have a non-negotiable clause about freedom of labour movement.
As the Chinese proverb goes: “If you want to know the road ahead, ask those coming back”. Switzerland has been touted as a model of independence and sovereignty from the EU’s busybody regulations. In February 2014, a referendum in Switzerland saw 50.3% of voters back new curbs to immigration. But seeing how this strained relations with the EU, who in effect threatened to call off the free trade agreement, the government put it back to the citizens. The second proposal to reduce net immigration to 0.2% of Switzerland’s population was massively rejected by 74% of voters.
In fact, Brussels has quoted unequivocally that “Free movement of workers within the EU is regarded as a non-negotiable principle of the Single Market and hence of any FTA”. Is this the solution to the UK’s issue with immigration controls?
Would Britain’s financial industry have to go back
to square one?
And then there is the perennial EU reputation for inefficient, slow-moving bureaucracy. Outside of the EU, Britain would not implement the transaction tax due to come into effect in 2016, and could lift the cap on bonuses in the City.
But for the young people of Northern Ireland who often set their sights on London to build their experience, the shine might be taken off somewhat if the UK leaves the EU. The financial industry would no longer be covered under EU regulation: it would find itself on the other side of regulations like UCITS.
If an investment fund obtains UCITS status it can be marketed to all 28 member states. This would no longer cover the UK, and in effect UK-based funds would have to obtain regulatory approval in each of the states that they would like to market to.
As a case in point, according to irishfunds.ie there were €1.4 trillion assets under management in 3,606 UCITS funds by the end of March 2015 in Dublin alone. These funds can’t market to the City of London or any other lucrative part of the UK if Brexit happens until new regulation is formed. Where do you start?! This is only a microscopic dent in the mountain of work that would need to be done, simply to get to the place where the admittedly slow moving EU has already come to. Is this really moving forward from their position today?
How much would the UK really save – and what
would it really get in exchange?
Pro-exiters put forward that the UK contributes £8.5bn to the EU budget, and argue that it could put that money to much better use. Could it, though? Denmark has to pay a certain amount of money to trade with the EU; if the UK participated in the EFTA, it would still have to contribute (at current estimates) £4bn. In the “take it or leave it” perspective of a trading agreement with a 27-strong bloc, it would save half of the money that it pays into the EU, but for a mere fraction of the benefits.
Brexit means a weaker EU, but a weaker Britain
There’s something else I don’t hear discussed at all. What does the geopolitical picture look like with a weaker Europe? The EU is a €11 trillion economy, but if you take the €2.5 trillion represented by the UK it only leaves €8.5 trillion. The balance of power within the EU would also shift towards the South, towards Spain and Italy, and towards the East considering the relative size of Poland alone. Where would Irish influence fit in all this? A UK-less Europe at the G7 table would shift the geopolitical power towards China and the US, lessening both the UK’s and the EU’s influence when you need concerted response at a global level, as with the Charlie Hebdo attacks or the situation in Ukraine.
What if Scotland chooses to stay in the EU? Britain
would be further diminished
Finally how about the situation within the UK, if Scotland pushes for and carries a referendum to stay in Europe? Where does Northern Ireland find itself then in the smouldering discussion of devolution? Think about how a decision to leave the EU would negatively impact the FDI, which Invest NI has worked so hard to build. Seen from the boardroom of a large multinational that’s thinking of expanding into Europe with a view to getting access to the simple market, would they choose the UK if its EU membership is in question? Maybe. Maybe not.
All in all, I think it would be an absolute disaster for Northern Ireland and it’s absolutely crucial that a rounded, lengthy and comprehensive economic debate is held between now and the referendum date so that people are fully aware of what the consequences of dissolving this relationship might be.
What do you think? Are you concerned about the consequences of Brexit? Do you think Northern Ireland would benefit, or be harmed by Brexit? Let me know on Twitter @SusanHayes_!
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