Brexit jobs dividend may not be good for Ireland

We could be thrust back into a situation where future growth is largely restricted to the east coast, writes Paul Colgan.

Can you imagine what the next few years might have looked like for Ireland and Britain were it not for Brexit? The Irish economy, in spite of the red-white and blue freight-train heading towards it, has been growing away happily.

Over 16,000 people found work here in the final three months of last year, continuing the strong growth seen earlier in 2016.

Not only this, but jobs were added in every part of the country.

Exclude the construction sector and we’re perhaps months away from touching record employment highs.

And across the Irish Sea, the British economy continues to confound those who had forecast an almighty recession. But surely it cannot last?

The political headwinds and uncertainty will eventually extract a toll. A hard Brexit will batter Ireland.

A shambolic round of Brexit negotiations could have untold consequences.

Despite the words of European Commission president Jean-Claude Juncker about the need to keep the Irish border open and suggestions that chief EU negotiator Michel Barnier is deeply aware of the requirement to protect the Good Friday Agreement — talk is ultimately cheap.

The €60bn bill for British departure being demanded by some in Brussels may be an opening gambit designed to unsteady Theresa May but it shows how fraught the whole process will be.

The appetite to punish the British is strong — the desire to protect Ireland’s position perhaps not so much. The economic overspill here will carry political and social implications.

The prospect of a more divided country looms. Any benefit that derives to Ireland from Brexit, and that’s not at all certain, will undoubtedly be concentrated in Dublin.

The border regions will have to grapple with whatever impositions arise from having the EU’s border on their doorstep. It will leave them worse off. Those living in the countryside, beyond the pale, will also bear the brunt. Farmers, so reliant on British consumers to buy their goods, will suffer.

Of course, Dublin too will feel some pain, but not nearly to the same extent. Banking jobs probably will arrive — the IDA certainly expects investment decisions to be made in that regard soon. But will it approach the quantum the IDA would like?

One senior figure on the Dublin financial scene put it like this recently: Paris and Frankfurt are going to be disappointed if they think a vast swathe of London bankers are itching to decamp to the continent; Dublin, on the other hand, simply “isn’t up to it”.

Most of the bankers leaving London, they said, are headed for New York.

Germany is deemed to be unsuited to the requirements of City of London bosses. Redundancy costs, for example, are depicted as being prohibitive.

There are reputedly bank branches in Dusseldorf and Cologne which have more staff than customers.

Whereas France, which recently passed a law requiring companies to set aside hours in which staff should neither send nor read work e-mails, is also not much liked by the bosses of major financial firms.

As for Dublin, there is a general acceptance that the city is already bursting at the seams.

With hundreds of families in emergency accommodation and every major artery jammed with traffic, the question is where the new banking staff will housed? And if they do find homes what will the impact be on those already living in Dublin?

There may well be a significant influx from the insurance industry but the numbers could be capped by the capital’s constraints. Nonetheless, Brexit has the potential to further deepen the divide between Dublin and the rest of the island.

Just as the economic recovery begins to extend into those corners of the country that were previously left behind, we could be thrust back into a situation where future growth is largely restricted to the east coast.

This could have major repercussions for our body politic.

Some will ask whether the traditional party system will adequately reflect the divergent concerns of the Irish people.

  • Paul Colgan is economics correspondent at 3News Ireland.

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