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Dublin: 9°C Wednesday 20 October 2021
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The big Brexit question: 'Should we side with the UK or the EU?'

The outcome of Brexit will likely leave both parties poorer, writes Kevin Cunningham.

Kevin Cunningham

WITH THE PROSPECT of a border between Ireland and the UK, Ireland Thinks was recently commissioned to carry out a survey to find out the views of the ordinary Irish people.

Through the polling company, the Irish Daily Mail asked a nationally representative sample of just over 1,400 people whether they would favour free trade and open borders with either the UK or the EU.

While the results indicated that a majority favoured tying our raft to the hull of the EU, a still significant 39% favoured the relationship with Britain and Northern Ireland.

In material terms, before 1973 over half of all our exports went to the UK.

Since then, Irish exports to the EU increased rapidly at an average rate of 10% per year. By the end of 2015, exports to the EU excluding the UK accounted for 44% of all exports while exports to the UK accounted for just 16%.

You may therefore assert that EU exports are more important to the economy. And while they probably are, it’s not as simple as that.

The value of exporting goods is predicated on our ability to capture some of the benefits of doing so. Pharmaceuticals and organic chemicals are largely driving our European trade and account for roughly half of all exports.

However, because they are among the most productive and tax efficient companies in the world, those gains are not captured to the same degree. For example, while roughly 24,500 people work in the pharmaceutical industry, 163,000 are employed in the agri-food industry.

Essentially our European trade is dependent on our FDI-generated economic model rather than our indigenous firms, which naturally have much closer ties to the UK.

Indeed, the agri-food sector is disproportionately adversely affected by Brexit – primarily due to its dependence on trade with the UK.

A 2016 report by Teagasc estimated that the total loss arising from Brexit in exports in the agri-food industry would be €800 million.

This is likely to be devastating for farmers, their families and communities. The polling data confirms this aspect.

To take just two counties, Dublin is most in favour of a relationship with the EU with 65% reporting whereas, in Kerry this falls to a 50/50 split among respondents.

When we look at the farming community, we observe a majority of 52% favouring a relationship with the UK.

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The relationship is, of course, more complicated as farmers are typically dependent on assistance from the EU in the first place.

It is therefore worth noting that in any involvement we might have in negotiations, the EU will need to recognise the importance of additional assistance for the Irish agricultural sector.

As a textbook example of an organisation sacrificing its goals for the sake of self-preservation, it would seem likely that the EU will insist on this trade barrier with the UK.

While it is more likely to make both parties poorer, the EU recognises a risk of contagion if Britain leads a successful exit from Europe – ie having full access to the single market and closed immigration.

This is of particular concern given the rise of populist, anti-immigration, and strongly Eurosceptic parties in Austria and the Netherlands, who, incidentally are leading for the first time in the latest polls.

While trade is undoubtedly important, Theresa May’s government has interpreted the Brexit result as a rejection of inward migration from the EU.

In Ireland again, movement of people is clearly a particular point of concern – albeit from the opposing point of view.

Surprising Sinn Féin factor

As the poll shows, there is a significant difference between how people view this choice in the three Ulster counties of Donegal, Cavan and Monaghan, compared with the rest of the country with up to 49% favouring the relationship with the UK.

Due to support from Sinn Féin in the region, this creates the somewhat bizarre situation where, for all the talk of irrational politics and emotion-trumping-reason, the party’s supporters are the most likely to prefer a closer alignment with the UK.

However, it would seem unlikely that Brexit negotiations could fully undermine the Good Friday Agreement and the Common Travel Area.

A form of passport control will almost certainly be required for people travelling between Northern Ireland and Britain, while Ireland would probably exercise a similar relationship with Northern Ireland to that which exists between Germany and Switzerland.

This arrangement, however, increases the prospect of smuggling which may potentially have the adverse effect of adding fuel to the fire. Or in this context: financing sectarian activity in a politically unstable Northern Ireland.

Dr Kevin Cunningham is a Lecturer at DIT and managing director of Ireland Thinks.

More: Irish engineers say Brexit has slowed down business – but they won’t be sacking staff

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Kevin Cunningham

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