May day: Words on Brexit spell problems for Ireland’s finances

Fiachra Ó’Cionnaith looks at what the implications of British PM Theresa May’s speech on Brexit, has for Ireland.

British prime minister Theresa May finally outlined her Brexit plans yesterday. What did she say?

In a high-profile speech that had been widely leaked since the weekend, Ms May confirmed her country’s plans in response to last June’s Brexit vote.

While not specifically mentioning the phrase “hard Brexit”, this is exactly what it is. The Brexit position involves Britain’s removal from the single market, though it could have “associate” member status within the EU customs union.

Ms May also said she wants Britain to gain complete control of its immigration laws as soon as possible.

In addition, she outlined her support for the common travel area with the Republic of Ireland and stressed the close personal relationship between both nations.

However, while answering some questions, Ms May’s comments also raise many others.

What does this mean for the Irish economy?

Despite what many commentators referred to as her friendly tone, Ms May’s plan spells problems for Ireland’s finances.

Potential tariffs are likely to be imposed on imports and exports with Britain, while it could also result in Britain slashing its corporate tax rate in a bid to lure Irish-based firms.

What does this mean for the Irish border?

While Ms May continued to back the common travel area between the Republic and Britain and stressed there will be no “return to the borders of the past”, it has been noted she did not rule out a hard border returning and failed to say Northern Ireland will be given a special status in negotiations.

It remains unclear how the current soft border between the Republic and Northern Ireland can conceivably continue if Britain leaves the single market and customs union, a partial reason for Ms May’s suggestion of an “associate” member status in the customs union.

What does this mean for Irish people living in Britain?

Ms May stressed that while she wants Britain to have complete control of immigration rules, she is aware of concerns this could impact on EU citizens and British citizens working in either jurisdiction.

While a deal is likely, concerns remain over whether immigration rights allowed under existing EU rules will continue in the post-Brexit scenario.

What is the Irish government going to do?

Taoiseach Enda Kenny emphasised yesterday Britain has again recognised the need for a common travel area and its special relationship with this country, but behind the spin, the Government is aware of looming problems for Ireland.

Officials are expected to re-double efforts to emphasise to EU colleagues the vulnerability of Ireland and do likewise during Ms May’s visit to Dublin this month.

Does the opposition agree?

As ever, no. Fianna Fáil has been particularly vocal, warning a Brexit minister must now be appointed and that Ireland’s preparation pales in comparison to Britain and the EU.

The party has also urged the Government to increase financial support for at-risk businesses.

This could be Britain just playing hard ball before EU negotiations begin in March. What if the EU calls its bluff?

This may happen, given the EU’s need to ensure a British deal does not encourage other countries to leave.

However, Ms May warned any attempt to “punish Britain” would be “an act of calamitous self-harm” by the EU. Watch this space.