Consequences of exit could see us tail-spinning into black hole
Yesterday's result in the EU referendum will have a profound impact on the Northern Ireland, the United Kingdom, and the Republic of Ireland economies as well as delivering a global shock akin to the crash of 2008.
The impact on the city of London, the global trading and finance capital, is probably not yet fully quantifiable. However, the Governor of the Bank of England's statement about the stress testing of our banks to the tune of £600bn and his immediate liquidity injection of £250bn spells out, with horrible clarity, the size of our economic predicament.
The drop in the value of sterling, while it may bring in cheaper prices for exports, has to be balanced against the significant increase in prices we will have to pay for imported goods like energy and food. We cannot know for certain all the impacts on our economy, but they will be many.
The market instability, wiping over £200bn off the value of stocks, puts the reality of our £8.5bn net contribution to the EU in stark context. The instability, confusion and lack of business confidence could, regrettably, put us into a self-induced recession - a recession that will impact Northern Ireland more than any other region of the United Kingdom.
The 'black hole' that has been created will have to be filled somehow. That means that over the next two years as we make the transition, funding for agriculture, welfare and the public sector economy will be cut back. While pruning several thousand civil servants may, in the long run, be beneficial, it would severely effect many other businesses.
We have agribusiness and energy sectors which are closely intertwined with the Republic of Ireland. The same is true for logistics, banking and financial sectors.
The flow of EU money, such as the €500m to help support investment and the community and voluntary sectors, will go and it is highly unlikely that this will be replaced until the UK's economy is back to where it was. This may take years.
However, we cannot accept these issues mildly. The people of Northern Ireland expect our government - especially as we voted to Remain - to take fast and effective action. We should be considering accelerating Corporation Tax reductions, reducing VAT on our hospitality sector, scrapping restrictive and expensive policies that have hiked energy prices to unacceptable levels, and to immediately sort out the £55m funding gap afflicting our universities. In short, we need to make ourselves competitive now.
- Steve Aiken MLA is the UUP spokesman on the economy and the former chief executive of the British-Irish Chamber of Commerce.