Belfast Telegraph

A 'no deal' Brexit would have serious implications for Northern Ireland

Analysis

By John Simpson

The possibility that the Brexit talks will not reach an agreed outcome has increased. Organisational links between the UK Government and the EU of 27 countries might simply crash in March 2019.

This would be the scenario described as 'no deal'. To that possibility, many observers have asked, is that when ' no deal is better than a bad deal?'

For Northern Ireland the prospect of 'no deal' is potentially more serious than that outcome for England. Northern Ireland is more open to the effect of economic changes than the totality of the UK.

Northern Ireland sells exports, outside the UK, to the value of £11bn: equivalent to more than 20% of total personal incomes: proportionately a high level of dependency on external trade.

If the Brexit talks fail completely, the implications for Northern Ireland could be dramatic.

The issues caused by a 'no deal' scenario would be wide-ranging.

First, there is the very large number of EU working arrangements which have included the UK, and which would unwind as the date of the UK's proposed withdrawal arrived on March 29, 2019.

Second there are all the questions that have been on the agenda around the search for 'no hard border' on the island of Ireland.

The wider UK issues are far-reaching and serious, including the ending of the deal that allows air passenger flights in and out of UK air space to and from the EU.

Even more onerous, there is the prospect that freight traffic to EU destinations would temporarily nearly cease whilst new documentation and alignment assurances were readied. The particular Irish dimension is, on its own, formidable.

Trade between Northern Ireland and Great Britain should be largely unaffected except where local firms export through GB to the EU.

Trade on this island, across the presently invisible border, would become (in legal terms) subject to EU import duties and, as imports, subject to UK tariffs.

An EU exit without an EU agreement could leave Northern Ireland trade without separate protection.

The alarming possibility is that a Brexit crash, instead of the much anticipated 'no hard border', might push the UK and EU authorities into a formal hard UK-EU border on this island.

This would be against the current ambitions of the governments in London and Dublin.

A Brexit crash would be welcomed by some Westminster voices but, on this island, has disturbing implications.

The Irish Government will want the EU (without necessarily the agreement of the UK) to implement a special all-island deal to protect cross-border trade.

Would the UK Government, in default, be willing to make a reciprocal agreement for trade to NI from Ireland?

Just two weeks ago, the NI Department for the Economy published a well-researched paper on the scale and structure of cross-border trade, written from a Northern Ireland perspective.

The evidence, possibly to the surprise of some readers, is that cross-border trade is more pervasive than might be expected and it confirms not just significant supply chain business but also a major degree of cross-border business integration.

Trade exports from NI to the Republic are worth more than £4bn each year: this sits alongside sales to GB of £14.5bn.

However, the nature of the north-south trade is much more interdependent with large numbers of transactions between smaller firms and often on a two-way basis.

Each year there are estimated to be over 1.2 million deliveries from NI to customers in the Republic: that is over 3,200 each day.

The average value of each delivery is estimated to be £4,500.

Two-thirds of the deliveries come from firms employing less than 50 people.

In other words, many smaller businesses on this island depend heavily on cross-border trade.

A Brexit crash has serious implications: many for businesses in Newry, Enniskillen and Londonderry.

Do the negotiators in Brussels and London appreciate the responsibilities they carry?

An unplanned Brexit crash needs to be avoided.

Belfast Telegraph

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