Brexit is both a threat and possible opportunity

I was a bit astonished this week at the amazed reaction of some to the comments made by an EU official that a hard Brexit would require a hard border on the island of Ireland, writes Jim Power.

From the beginning of the whole sorry process, I could never understand how such an eventuality could be avoided in the event of a hard Brexit.

The so-called backstop agreement has obviously complicated the issue but based on UK politics, and EU political, economic, and business imperatives, it was always going to be difficult to avoid a hard border in the event of the UK leaving without some type of trade deal.

I still believe the odds are against a no-deal Brexit, but one has to recognise that those odds are shortening on a daily basis as we move closer to March 29 and as the UK political system continues to look more and more dysfunctional.

Obviously, the hope is that sensible politicians who do not want a no-deal Brexit will eventually prevail and force UK Prime Minister Theresa May to do the right thing.

Perhaps I am clutching at straws, but it would be good to see the UK parliament assert itself.

Any which way one looks at it, Brexit represents a fundamental threat, challenge and a possible opportunity for Ireland.

Come what way, it should hammer home to us just how exposed our very small and very open economy is to the vagaries of international economic and political developments, most of which are totally outside of our control.

This has been highlighted again in Davos this week, with business leaders in attendance expressing a much more cautious view of the year ahead than this time last year.

The IMF rowed in with its own much more negative view of the global economic outlook.

This poses another existential threat to Ireland’s wellbeing.

Obviously, none of these threats represent good news for Ireland.

However, just as our very small and very open economic structure makes us very vulnerable, it also confers certain advantages on us.

Small size can be an advantage.

While we always benefit from positive global developments, as has been demonstrated very clearly over the past couple of years, it is possible to avoid negative external developments, provided our economic structures are nimble and of high quality.

Long-term strategic thinking and economic planning is vital for Ireland and should not be pushed off course by short-term global developments.

As a small open economy, if we plan properly and focus on the long-term imperatives, we will be capable of dealing with all challenges.

Very obviously, short-term issues such as maintaining sound public finances and a financial system that is forced to behave in a prudent manner by regulatory agencies is of the utmost importance.

Maintaining cost competitiveness is also very important.

However, longer-term strategic imperatives are even very important.

The long-term list is long.

The quality of the labour force is probably the most important issue.

Hence, strong investment in the quality of the education system is vital.

In general, high-quality public services such as law and order, the health system and education should be afforded high priority.

Connectivity is also of the utmost importance.

Hence issues such as roads infrastructure, the rail system, air access, and ports infrastructure are very important.

The IT infrastructure and capability is also vital in the rapidly evolving global business place.

An adequate supply of high quality and appropriate housing, offices and commercial space is also vital.

We do well on the office and general commercial and industrial accommodation side, but we are failing abjectly on the residential housing front. This has to change.

Overriding this whole long-term planning perspective should be the guiding principles of addressing climate change, the proper dispersal of regional economic growth and development, evolving demographics, and the need to achieve a balance between indigenous activity and foreign direct investment.

Of these issues, demographic developments will have a profound impact on the demand for health services and care for the elderly.

This has to be planned for now and not a decade down the road.

Tackling any of the issues is not rocket science.

However, these issues and others need to be planned for now and policymakers must not be distracted by short-term political imperatives or economic events.

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