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If a united Ireland DID result from Brexit, what would it do to our economy?

Such a situation has just become an awful lot more plausible in the wake of this morning’s referendum result.

pjimage Source: PA

THIS MORNING’S BREXIT result has, understandably, left people on both sides of the debate in something approaching shock.

But, again perhaps understandably, Northern Ireland has very quickly come to the forefront of people’s thinking on both sides of the border here.

The north was one of just three electoral areas out of 12 to vote Remain in yesterday’s referendum, with 56% of ballots cast against Brexit.

From that point of view, the near-term economic impact on the north should dismay a majority of its voters – they didn’t want a Brexit, but staying in the UK means that’s what they’ll get.

Screen Shot 2016-06-24 at 10.11.06 AM The relevant paragraph of the Good Friday Agreement concerning a possible united Ireland

With Sinn Féin this morning calling for a border poll (as allowed for under the 1998 Good Friday Agreement assuming a majority of voters no longer wish to be part of the union), suddenly a united Ireland becomes a far more viable position. Not least because it’s starting to look very likely that Scotland will look for a second independence referendum of its own given its own anti-Brexit vote.

“A referendum on a United Ireland is now a democratic imperative and it is incumbent that the Irish government and all Irish nationalist parties support this demand,” Sinn Féin MEP Matt Carthy said earlier.

To do anything less would be to betray the best interests of the Irish people.

24/6/2016 Brexit Crisis In Ireland Enda Kenny making his Brexit statement earlier today Source: RollingNews.ie

But, were it to come to pass, what would such a union’s economy look like?

Better off

Just three months ago, a report published by a Vancouver consulting house suggested that a united Ireland would be as much as €35 billion better off than with the two countries remaining separate in the first eight years following unification.

That report used the models of unification seen in Germany and Korea in the 20th century as a basis.

24/6/2016 Brexit Crisis In Ireland Matt Carthy, Mary Lou McDonald, and Donnchadh Ó Laoghaire of Sinn Féin at their press conference earlier today Source: Leah Farrell

Its author, Dr Kurt Hubner, even suggested that a political integration wouldn’t be necessary. Which sounds a little far-fetched  to us. But then how else could it be accomplished?

Both the Industrial Development Authority (IDA) and the National Treasury Management Agency (NTMA) are in agreement that Ireland’s finances are currently in relatively good shape.

CEO of the IDA Martin Shanahan said today that the Leave vote in Britain could in fact present opportunities for Ireland going forward.

26/2/2015 IDA Business Strategies Martin Shanahan Source: Sasko Lazarov/Photocall Ireland

“Our view… has been that Ireland would benefit overall from the UK remaining,” he said, however “the situation may present opportunity for Ireland in attracting Foreign Direct Investment (FDI). Ireland will remain a member of the European Union with full market access and that will be attractive to investors”.

The NTMA meanwhile reckons that most of the funding Ireland requires for the rest of 2016 has already been taken care of, while our “funding position” remains strong.

Conall MacCoille, chief economist with Davy Stockbrokers, says that recession in Ireland is “unlikely” (with the caveat of Gross Domestic Product (GDP) expected to shrink over the next 18 months), but that “political developments are now key”.

That’s a sentiment being echoed across the board by the likes of Ireland’s tourism and agriculture industries today.

The early stages of those developments can currently be seen with the ‘contingency plans’ being announced by our own government today.

How would it work?

Any sort of union between the North and the Republic would be no easy match, according to professor of finance at Trinity College Dublin Brian Lucey.

lucey Brian Lucey

Speaking to TheJournal.ie, Lucey acknowledges that there are worse alternatives than an economic union in the aftermath of Brexit.

“The alternative is going back to the hard border of the 60s and 70s, and that’s no improvement on the current situation,” he said.

The problem is more a question of integration Lucey says. Northern Ireland’s industry-focus has moved fundamentally towards public services in the last 40 years. Combining that with our own (currently) booming economy would be easier said than done.

“Currently the north is taking in €6 billion in funding from the UK each year. If they choose to leave the UK that money has to come from somewhere,” he says.

The EU will help naturally, but it won’t pick up the full tab. Which means that taxation would have to take up the slack. And that means moving from our very reasonable tax regime to something far more onerous.

Lucey sees competitive advantages for Ireland going forward. “The FDI in the UK, that has to go somewhere. Why not here? Although should Scotland leave Britain we could find ourselves in competition with a lean, mean Scottish FDI machine.”

If we go in with the North, we’re looking at an Eastern Germany situation when it comes to integration. 20 years later, that country still isn’t on a totally even keel.

But could he see it happening in actuality?

“I have no idea. I consider the DUP (Democratic Unionist Party) the stupidest political party on the face of the planet,” Lucey says. “They have cut off their nose to spite their face with this vote.”

Nothing would surprise me after this (Brexit). That includes us facing into a border poll.
The Good Friday Agreement is all couched very vaguely, but if 75% of the seats up north wanted it, you could see it happening.

Read: What impact will Brexit have on the Premier League?

Read: Brexit: Why Britain voted to leave the EU

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