Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Display:
In terms of the ratio of both exports and imports to GDP, Ireland is more exposed to Brexit even than the UK. Unless we consider all the UK's trade with third countries facilitated by EU trade agreements.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Thu Jul 11th, 2019 at 09:38:52 AM EST
[ Parent ]
Yes, and given that a lot of Ireland's exports are food and agricultural products, subject to the highest WTO tariffs, and produced in the more economically vulnerable rural parts of the country, the political and economic impact will be more magnified still.

But don't forget that less than 100 years ago Ireland fought an economic war with the UK, with devastating economic consequences, and persisted because it prized it's political independence even more highly. Ireland's trade dependence on the UK has already reduced from 70% of all trade at EU accession in 1973 to about 14% now and Brexit will accelerate that trend.

So while a no deal Brexit will be extremely disruptive, to an extent it is only accelerating pre-existing policies and trends, and slowing down an economy which is at risk of over-heating now. Don't underestimate the risk of both sides digging in on this, with a virtual trade war the result. If I could, I'd be buying Aldi and Lidl shares right now (and selling TESCO) on the assumption that their supply chains are less UK dependent.

Boris may be successfully riding a wave of English nationalism at the moment, but he should think carefully about arousing an Irish one. Ireland is the only EU country where the UK still has a significant trading surplus, and it's economy is no longer the UK dependent minnow it once was.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Jul 11th, 2019 at 10:58:01 AM EST
[ Parent ]
I'm not saying Ireland should or would roll over for the UK? Just that it will suffer.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Thu Jul 11th, 2019 at 11:06:24 AM EST
[ Parent ]
We are agreed on that, but where I think we may disagree is the extent to which this is now outside our control. For instance, I have just posted this comment on an Irish Times article written by a Fine Gael hack who regularly floats trial balloons for the government:
Dublin must be open to a last-minute compromise on backstop
I think we all may be labouring under something of a delusion here - including my esteemed fellow blogger, Finfacts, with whom I almost never disagree. The backstop may have begun life as an Irish invention, to protect the GFA, but it has long since morphed into an EU determination to protect the Customs Union and Single Market (CUSM) and to prevent the UK using the Irish border issue as a lever to gain access to the CUSM free of charge and without having to respect the EU four freedoms and still be able to negotiate its own trade deals.

We couldn't back down on the backstop now, even if we wanted to, because it has become an issue of principle for the EU, and because the EU has come to the conclusion that a no deal Brexit would hurt the UK far more than the EU, and that therefore the EU's negotiation position post Brexit will be even stronger than it has been to date. A few months of severely curtailed trade, no EU landing rights for UK airlines (incl. Aer Lingus), food and medicine shortages in the UK, threats of Scottish secession and violence on the streets and the UK will come back begging for a deal, any deal.

Yes, Ireland will be badly hit too, and the EU will be extremely sympathetic and helpful to reduce the worst effects, including turning a blind eye to rampant smuggling across the border because the volumes will be immaterial in a larger CUSM context. The large import/exporters across the land border - Tesco, Guinness, Dunnes Stores etc. will be strictly monitored on site to ensure compliance in the same way as VAT compliance is audited, and this will gradually be extended to smaller businesses, but private individuals and small traders bringing a boot load of stuff across the border is immaterial in the larger scheme of things. It is preferable to war.



Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Jul 11th, 2019 at 11:57:46 AM EST
[ Parent ]

Display:

Occasional Series