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How the Republic could reap benefits from Brexit

The Remain camp want to prevent an EU exit by hook or by crook. But couldn't the UK leaving be good for the south of Ireland, asks David McWilliams

Published 10/05/2016

David McWilliams speaks at a recent business breakfast
David McWilliams speaks at a recent business breakfast

Listening to the Brexit debate and the extraordinary lengths to which the Establishment in Ireland, Britain and Brussels is going to snuff out the 'Vote Leave' movement, "hook" and "crook" spring to mind. The Bank of England, the UK Treasury and, of course, the Organisation for Economic Cooperation and Development (OECD) have all come out with "serious" documents predicting economic calamity if the UK votes to leave the EU.

The 'Remain' camp paints a picture where, largely because of a fall-off in inward investment, the UK economy will plummet downwards, sterling will weaken and, ultimately, the UK will lose its influence in the world because it will be isolated. In addition, this view - mainly articulated by the Remain campaign - makes the point that the UK will not have free trade with the EU and so trade will stop or be massively hindered, further ratcheting down growth.

In contrast, the Leave people suggest that unbound by the EU's bureaucratic shackles, a free-wheeling, free-trading UK will become hyper-competitive and the economy will accelerate rapidly. It will become a type of Singapore in the North Atlantic. Their economic analysis, which is, incidentally, getting much less Press either in the mainstream papers or from the BBC, points to 5% growth rates as a direct result of leaving. The truth is that no one actually knows what will happen.

One plausible argument is that the UK - with its 60 million-plus population, the reasonably well-run sixth-largest economy in the world with its own currency, huge wealth around London and excellence in finance, advertising and, increasingly, tech start-ups - will be fine after an initial wobble.

This is the middle-ground view. It's not the stuff of posters and sexy campaigns, but it's probably more accurate than the evangelical zealotry of both sides.

The question is: where do we stand?

The most reasonable estimation of the future if the UK is out of the EU is one where the complexion of the UK economy changes. If there are doubts over trade deals and the treatment of UK capital and produce trading with the EU, as the Remain camp argues, then direct foreign investment into the UK will falter. The UK will suffer from complicated trade deals and a lack of clarity as to how things will pan out.

This means something very clear for the Republic of Ireland. If direct foreign investment, particularly American direct foreign investment, doesn't go to the UK, where will it go? What is the country that feels, smells and tastes like Britain, but isn't Britain? Where would US executives feel most at home, with tax rates that are attractive and full access to the EU? Yes, you guessed: Ireland.

Far from it being in our interest for the UK to stay in the EU, it is in our commercial interest for the UK to be mired in red tape, uncertainty and fog. So why is the Irish government actively campaigning for the UK to remain in the EU? Why are the Irish doing Brussels' job, when it's not the Republic's job to advocate anything in the domestic politics of a quasi-foreign country.

Britain is Ireland's main trading partner. We still feed the UK. Close to half Ireland's total agricultural exports go to the UK, so unless they stop eating after Brexit, there's no reason to think that Ireland will not continue to feed them.

The only reason there would be a problem with UK trade is if the EU got vindictive after Brexit and put up trade barriers, and if the Republic did not use their veto at the Council of Ministers to block such an adolescent reaction. The veto is reserved for extreme events, which dramatically affect your national interest. Trade barriers and border checks with the UK are such events.

Can you imagine an Irish government that goes along with a spiteful EU diktat punishing the UK to prove a geo-political point, which would be against its fundamental national interest? Maybe there are enough Europhile zealots in positions of power deep within the Irish establishment that such a self-harming decision is not out of the question.

In short, Brexit may actually be good for Ireland in the long term, particularly if the damage to the UK's investment image is as bad as the Remain camp claims it will be if the UK leaves.

Belfast Telegraph

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