Leaving EU without deal 'could cripple Northern Ireland industries'
Prime Minister Theresa May's claim that "no deal on Brexit is better than a bad deal" is not an option for Northern Ireland business, an economist has warned.
Rain Newton-Smith, from the CBI, told members here yesterday that the worst-case scenario - trade agreements reverting to World Trade Organisation (WTO) tariffs - would leave local businesses worse off.
She said: "This idea that if there's no deal we're happy with we would just walk away will not work."
Ms Newton-Smith warned the move could cripple industries that rely heavily on cross-border trade, such as agriculture.
In some sectors, exports across the Irish border are as high as 70% of sales, and certain products would face tariffs of 36%.
The senior economist, addressing the Northern Ireland CBI annual economic summit in Belfast, said a lack of parameters and a failure to adhere to EU regulations would also cause issues for exporters down the line, arguing it was better to have "upfront commitments" made.
She added: "Around 34% of the UK's exports in bread, pastries and cakes are destined for Ireland.
"Amazingly, 75% of our total exports in milk and cream are also destined for Ireland - and a lot of that is coming from Northern Ireland.
"I think that says a lot about how interconnected the UK economy, and the Northern Ireland economy in particular, is with Ireland. That's why we've tried to get across that this idea of the UK walking away from the EU with no deal really isn't an option for businesses.
"If we were to fall into WTO tariff arrangements, agricultural products would be facing tariffs of around 36%. But actually, it's not just around tariffs, it's also around how we recognise each other's regulations.
"In the airline industry we need to have some recognition of health and safety requirements, so that planes are able to fly across European airspace.
"There are some very practical things we will need to have some recognition of, so that we don't end up with these sort of cliff edges at the end of a deal.
"Here in Belfast, in many ways, you really are at the epicentre of some of the issues that are going to hit the UK economy over the next few years."
Ms Newton-Smith said a growing Chinese middle-class would become more important to exporters in a post-EU UK. "The sorts of things that the rising middle-class in Asia will be looking for are some of the things the UK has a comparative advantage in, from financial services to healthcare to pharmaceuticals to media to culture to higher education and some of the more luxury, branded products," she added.
"Since the referendum, in some ways, one of the only effects so far has been the weaker exchange rate, and what that has meant is that when we look at our manufacturers the weaker exchange rate is making them feel more competitive.
"In our surveys our manufacturers feel at their most competitive in many years when it comes to exporting."
She also pointed out that the UK was likely to see more volatility in the exchange rate of the pound in the future.
Ms Newton-Smith added: "Many businesses have said that they have hedges which last around six months, but a lot of those are coming to an end now.
"I think, particularly in the retail sector where there's a lot of competition, retailers are waiting to see who's going to blink and move first when it comes to raising prices. That will change how the economy feels for a lot of consumers as we move forward."