Brexit boost in the offing for financial services sector

Brexit could trigger flight restrictions and reduced tourism numbers here but may surprisingly boost the financial services sector, a report predicts.

Air transport with Ireland will be indirectly affected by the loss of routes to and from British airports such as Heathrow. Picture: Gareth Fuller/PA

Stark warnings are contained in a report for Business Minister Heather Humphreys, which looks at the worst- to best-case scenarios for Brexit up until 2030.

Sector breakdowns show the most damage done would be to the agri-food sector, including beef, dairy and food processing industries. They would be worst hit if World Trade Organization rules were slapped on trade with Britain after it leaves the European Union.

The report was assessed by Cabinet yesterday and will be launched next week by its authors, Copenhagen Economics.

Air transport will be one of the five main sectors hit by Brexit. It is noted that the Dublin-London route is Europe’s busiest international route. When Britain leaves the EU though, the rules on accessing airspace, airline ownership and intra-EU flights would also change.

A range of changes are envisaged under the four long term scenarios assessed. Britain could lose access to the EU open skies deal.

The report warns: “With fewer routes in and out of the major UK hubs such as London Heathrow and Gatwick, this will indirectly affect air transport with Ireland.”

If Britain stands outside the European Common Aviation Area, there will be new restrictions on flights between Ireland and Britain and between Ireland and other EU countries operated by UK-owned airlines, it is also warned

Tourism will be impacted by Brexit as well. While not outlining specific numbers for this sector, the research says Brexit will impact on numbers.

“This is because of an expected decline in outbound travel from the UK as a result of the general economic downturn following Brexit and because of the sterling depreciation,” said the report. “This will unavoidably have an impact on Ireland since more than 40% of inbound visitors to Ireland are from the UK.”

The report also suggested ways to reduce the impact of Brexit and sectors that might indirectly benefit, and said negotiating the best possible outcome is crucial.

Securing an EEA-type deal for Britain will lessen the reduction in the economy by €11bn, as opposed to WTO tariffs being applied to goods and harsh trade restrictions.

Newly agreed EU deals with Canada and Japan among others should also be capitalised on while new free trade deals with countries such as Australia, New Zealand, and the Mercosur countries (Brazil, Argentina, Uruguay, and Paraguay) will help. New skills, enterprise, and trade promotion work by the government and agencies will also help reduce the impact of Brexit.

The report also suggests that the financial sector could benefit from Britain’s exit. This sector could benefit by up to 4%, partly as a result of relocation of activity from the UK to Ireland, in order to maintain access to the EU market.

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