UK prime minister David Cameron has promised to hold an in-out vote on Britain’s membership of the EU before the end of 2017, a move that has worried many large and small exporters here because Britain imports so many goods and services from Ireland.
The IEA estimates the chances of Britain voting to exit are low — it evaluates the risk at 10% — but wants the two countries to work harder to establish ways that they could strengthen trading ties ahead of the 2017 vote.
At a business briefing, IEA chief executive Simon McKeever said a process would be important to underline the key trading role the UK plays for Ireland, but to emphasise to the British public the major role Ireland plays as a major importer of British goods too.
“The possibility of a so-called ‘Brexit’ is extremely serious, not just for Ireland, but for the UK, EU and US,” said Mr McKeever.
“We all know how important a trading partner the UK is to Ireland, but Ireland is also a very important export market for the UK.
"It is therefore of vital importance that the Irish government prepares for that unlikely possibility, and that both governments work together to put measures in place to secure the bilateral trade relationship no matter what the outcome of the UK referendum.”
The IEA estimates that a ‘Brexit’ would damage Irish economic growth in the first year, as trade was disrupted and energy prices would rise because of Ireland’s reliance on gas and fuel from Britain.
In the longer term, however, Ireland could benefit by attracting the foreign investments in financial institutions that would otherwise go to the City.
International banks may look to Ireland as a settled member of the EU and base their operations in the event of the UK exiting the EU.
Economist Ana Boata said: “The impact of UK’s exit from the EU will have both positive and negative effects on Ireland. In the short term, there will be painful economic dislocation as the two close trading partners adjust to the UK’s non-EU status and Ireland finds new markets.
“The longer term gain could include Dublin attracting significant investment flows from London, notably in the financial, chemicals and pharmaceutical sectors.”
The briefing was attended by Dermot Curran, assistant secretary general with responsibility for the British-Irish and Northern Ireland affairs division at the Department of Taoiseach; Dominick Chilcott, British ambassador to Ireland; Paul Finnerty, group chief executive at ABP Food Group; and Stephen Keogh, head of William Fry’s London office.