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Brexit drives slump in Irish imports from Britain while cross-border trade flourishes

The food and beverage sector has been particularly affected by the changes, according to the ESRI.

Image: Sasko Lazarov

BREXIT HAS DRIVEN a sharp decline in trade between Ireland and Britain this year but the drop has been largely offset by an increase in cross-border trade, according to fresh analysis by the Economic and Social Research Institute (ESRI) and the Department of Finance.

Over 40% of the Republic of Ireland’s imports from the United Kingdom overall came from Northern Ireland in the first half of 2021 — up from just 6% in 2015.

But imports from Britain represented just 7.2% of total Irish imports in the first half of 2021, down from 23% in 2015.

Irish exports to Britain have also declined in importance, but to a lesser extent. Having represented nearly 11% of overall Irish exports in 2015, the value of goods being exported to Britain fell to just over 6% of the total in the first six months of the year.

Some industries are more affected by the shift in trade patterns than others, according to the ESRI, with the food and beverages sectors particularly negatively impacted.

At the same time, exports and imports to and from Northern Ireland are increasingly taking up a larger share of Irish trade.

Imports from the North now take up about 5% of the total, up from just 1.5% in 2015 driven mainly by the food and beverages sector.

The analysis hammers home the impact of Brexit-related red tape and supply chain disruption, which has affected the flow of goods to and from the islands of Ireland and Britain.

“Although many supply chain challenges have come together since the onset of the Covid-19 pandemic, the greatest driver of the reduction in Irish imports from Britain can be traced to a Brexit effect,” the report’s co-author, ESRI Research Professor Martina Lawless said. 

According to recent trade figures published by the Central Statistics Office, the value of imports to the Republic from Northern Ireland grew €1.2 billion (+63%) to €3.2 billion in the first 10 months of 2020 compared with the same period last year.

The value of goods moving in the opposite direction, meanwhile, jumped 46% to €2.9 billion over the period compared to last year.

Imports from Britain declined by 46% to almost €1.5 billion in the first 10 months of the year.

Goods entering the Republic and Northern Ireland — which has remained within the European Union’s single market for goods under the terms of the Northern Ireland Protocol — have been subject to additional checks and red tape since the end of the Brexit withdrawal period in January.

To avoid delays, businesses on both sides of the border have “re-organised” their supply chains in a bid to find alternative suppliers and customers on the island, according to a separate analysis by UK supply chain consultancy Woodland Group this morning.

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“One of the key concerns voiced by Irish businesses, post-Brexit, is that importing from, or through, the United Kingdom is an inefficient and expensive method of transporting goods when compared to links with Europe directly, in addition to the worry of being outpriced and hit with lengthy delays on stock,” Woodland has highlighted in a new release. 

As a result, Irish firms are also increasingly “cutting out” Great Britain entirely by trading directly with Europe.

“In particular industries, we’re definitely seeing where traditionally a lot of goods were sourced in the UK or exported to the UK, there’s been a switch to Europe,” Glenn Carr, chief executive of Rosslare Europort told The Journal last month.

“We definitely see it in the port in terms of the mix of goods that are there now — ingredients, food, dairy, pharmaceuticals.”

The UK is yet to introduce its own post-Brexit trade checks on European goods destined for Britain, which has been helpful for Irish exporters.

Due to be rolled out from 1 January 2022, now-former Brexit minister David Frost announced last week that the implementation of the new controls would be pushed out to later in 2022  as “an act of goodwill” while talks around the Northern Ireland Protocol continue. 

Lawless said the postponement is “good news” for Irish exporters. 

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