Irish business leaders are putting Brexit plans on hold

As Brexit polls suggest a ‘leave’ vote is possible, business in Ireland can’t afford to be complacent, says Kyran Fitzgerald.

Irish business leaders are putting Brexit plans on hold

THE latest opinion polls suggest a swing towards the ‘Leave’ camp in the run-up to the June 23 referendum vote in Britain.

So, are Irish business leaders panicked and battening down the hatches? Not to any great extent seems to be the answer.

The voters’ verdict is seen by experts as one that is absolutely crucial to our prospects.

A victory for the Brexiteers could shake up frothy global financial markets, perhaps even trigger a renewal of the eurozone crisis.

There is evidence that much investment in Britain has been put on ice while London’s high-end property market is treading water.

So, are Irish managers getting together for earnest gatherings as they did in the run-up to the completion of the European single market in 1992, or prior to January 1, 2000, when it seemed ‘Y2K’, the millennium bug, threatened to crash computing systems and cause planes to fall from the sky?

No. It is a case of steady as she goes, keep calm and carry on.

Investment is buoyant. Projects are announced on an almost daily basis.

The key services sector forges ahead. According to Alan McQuaid, chief economist at Merrion Capital, there appears to be an air of complacency.

A Brexit vote would be followed by quite a tumultuous period for financial markets. He wonders whether firms are really prepared.

The markets are focused on economic issues forgetting that the impact of migration is to the forefront of many peoples’ minds.

Then there is the risk of a terrorist attack during the European football finals. A Leave vote would impact a lot of Irish companies.

“If the UK votes to leave, the European Union is gone, personally speaking,” Mr McQuaid believes.

He points to the fragility of many continental states as anti-EU forces gather strength and to a general sense that the EU itself has become “too rigid, too bureaucratic.”

Ian Talbot, CEO of Chambers Ireland, considers that “it is not at all clear what the implications of a withdrawal would be.”

His members are holding fire and perhaps correctly so, as it is over the next two years that a host of issues will have to be thrashed out between Britain and the rest of the EU should the Brexit camp prevail.

Will it be possible to have an open border? Given the importance of immigration control would Britain feel obliged to close the border with the Republic in any event? What will be the implications for energy security given our geographical location?

In Mr Talbot’s view, you can’t do contingency planning in a vacuum — hence it is best to wait until after the vote. The impact of a Brexit event would be felt as much by importers as by exporters, in retailing, manufacturing as well as in the agri sector where dependence on the UK market is particularly high.

Teagasc researchers Trevor Donnellan and Kevin Hanrahan have produced a paper which should make managers in the sector sit up and take notice.

They point to a worst case scenario where Britain and the rest of the EU fail to negotiate an exit trade deal and where the UK instead negotiates an agreement with net food exporting countries outside the Union.

In such a case, the EU 27 and UK would be merely obliged to offer each other ‘Most Favoured Nation’ status and tariffs would apply.

In such case, Ireland stands to lose up to €800m worth of exports. In a best case scenario, the loss could be as low as €150m.

In the Irish case, the beef, dairy and lamb markets stand to be most affected. In 2014, merchandise exports to Britain accounted for around 16% of a total of €92bn.

Imports from Britain accounted for around one third of the total. But Irish agri food exports to the UK amounted to €4.5bn, with a trade surplus of just over €450m.

In truth, a Brexit vote would open up cans of worms all over the place, creating headaches too for importers, shoppers, jobseekers, even researchers.

It would all unfold over a period extending well beyond the two-year period provided by article 50 of the Treaty.

It would be happy days for consultants and for conference organisers, not to mention lawyers and accountants, but less so for lorry drivers passing through ports.

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