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Many uncertainties over impact of Brexit

Dr Esmond Birnie

Desolation or bonanza? What might be the impact on Newry or other border areas if the UK votes to exit on June 23? Given that Northern Ireland has the UK's only land frontier with the rest of the EU, there is obviously great interest in questions like this one.

The honest answer is that no one can say for sure. It all depends. It depends crucially on what sort of deal the exiting UK negotiated regarding the extent of access to the European Single Market. What we do know is that in 2014 (according to Nisra) 59% of all Northern Ireland exports were sold to the rest of the EU (of which 37% went to the Republic of Ireland). It may be worth remembering that when the euro was introduced about 15 years ago, there were fears that the fact the Republic was "in" and the UK was "out" would constitute an economic disaster for Northern Ireland. We must also weigh up whether an exit could jolt Northern Ireland businesses towards more distant and possibly higher growth potential markets.

One of Newry's largest employers, Norbrook Laboratories, has indicated that notwithstanding considerable sales to EU, it would remain in Newry post-exit. There is the broader question of what would happen to inward investment (FDI) if exit occurs. To the extent that overseas businesses have come to Northern Ireland to get into the Single Market then some FDI could be discouraged. However, it is less clear what might happen to FDI which sells back to, say, the North American market.

Given continued pension and tax differences, labour mobility across the border is not perfect even now, but a high degree of mobility has been achieved over the last few decades. The Republic and UK have in fact been members of a Common Travel Area (CTA) since partition in 1921. There is no sense that anyone in London wants to change that even post any exit, but for sure maintaining the CTA could be challenging if there is an exit.

Farming is obviously a key sector throughout the border lands. The EU's Single Farm Payment has in some years represented almost all of farm incomes. The fundamental question for this sector is whether fundamental reform to achieve sustainability is more or less likely if the UK remains within the EU and Common Agricultural Policy. The community and voluntary sector is also heavily dependent on EU subsidy. So exit has the potential to either provoke necessary reform or serious contraction. At the same time, the fishing industry is well represented along the south Down coast and there will be strong views within that sector about the possible impact of exit.

The present high degree of cross-border co-operation between London and Dublin and, indeed, Stormont and Dublin was institutionalised through the 1998 Belfast Agreement. In formal and legal terms, as an international treaty, those arrangements are probably not dependent on the UK remaining within the EU. However, exit might affect the mood music.

To sum up, the only certainty about the impact is that it is uncertain.

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