Belfast Telegraph

Top economist warns of negative effects of leaving EU

By Margaret Canning

Northern Ireland will lose out if Britain votes to leave the European Union after the general election, an economist has said.

Alan Bridle, chief economist at the Bank of Ireland, said a so-called 'Brexit' would have a "net negative effect" on the region.

And he said there was a 'one in eight' chance of Britain ultimately leaving the EU if disaffection with Europe peaks.

In that scenario, Mr Bridle said Northern Ireland would face losing out on around £300m for agriculture under the Common Agriculture Policy.

Britain would be unlikely to compensate for such a shortfall from its coffers as farming is much less crucial to the UK as a whole than it is to Northern Ireland, Mr Bridle said.

The economist was speaking at a Bank of Ireland briefing on the likely economic impact of possible outcomes of the upcoming general election.

The Conservative Party has said it would renegotiate the terms of Britain's membership of the EU, and hold an 'in/out' referendum if it emerges as the biggest party after May's vote.

Mr Bridle said that leaving the EU could also have an impact on Northern Ireland's attractiveness to US foreign investors, as positioning themselves in Northern Ireland would no longer give "unfettered" access to EU markets.

Last year US software company Revel Systems said it was setting up in Belfast as part of its strategy to get into both UK and European markets.

Andrew Webb, a consulting director at consultants OCO, said: "If the UK exited but remained part of a free trade block, there would appear to be no practical reason for investor flight or fright.

"That said, perceptions count for so much in inward investment."

He said that when OCO surveyed 200 company chiefs who have invested in the UK, half said they would reconsider their investment in the event of a Brexit.

Mr Bridle said it was not clear how many inward investors were in Northern Ireland because it was a gateway to the EU. "Matters like this could be a bit closer in eight weeks' time," he said.

While the UK financial markets had been powering ahead in recent times, with the FTSE 100 reaching an all-time high last week, Mr Bridle predicted a "wobble" for the markets either just before or straight after the election.

He said that Chancellor George Osborne could be termed a "lucky Chancellor" as his party was heading into an election as the conomy enjoyed the fastest pace of growth since before the financial crisis.

But Mr Bridle added: "Is it the right kind of growth? There is still an emphasis on the services sector and financial sector - a fair old sugar boost from the services sector. But can it last?"

He said the economic mood was relatively light as the election beckoned.

Living standards were finally going up due to a fall in oil prices and in inflation, which reached a record low of 0.3% in January.

But Mr Bridle said voters would face a dilemma in polling stations. "Living standards had been declining for around six years but as people get into the ballot box do they remember the last five or six years, or will they be looking ahead and thinking, things are better now, and will keep getting better if we stick with the coalition?"

Belfast Telegraph