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14 June 2016

Brexit by Numbers

Posted By: AIB Business
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With just days to go to the UK referendum on its EU membership, and uncertainty undercutting the debate, there is a big decision facing more than 46 million eligible voters. An EU without the UK would unequivocally be bad for Ireland, bad for the UK, and bad for the EU, writes Noelle O’Connell from European Movement Ireland.

To paraphrase Monty Python’s “The Life of Brian”, what has the EU ever done for the UK and what has the UK ever done for the EU?  At European Movement Ireland, our answer would be: quite a lot.

 

British-Irish Trade in Numbers

The London School of Economics has reported that Ireland would suffer the largest proportional economic loss of any country, other than the UK, should a decision to leave the EU occur.  When looking at the numbers that underpin the close British-Irish socio-economic ties, it is easy to see why.

  • Over €1.2 billion (and growing) in goods and services are traded between our two islands every week.
  • The UK is Ireland’s second largest trade market after the US and its first in terms of exports only.
  • Ireland is the UK’s fifth largest (in value terms) destination for exports; in fact, the UK exports more to Ireland than to China, India and Brazil combined.
  • 200,000 people are employed in Ireland as a direct result of exporting Irish goods to the UK, accounting for approximately 10% of all employment in Ireland.
  • Dublin-London is the second busiest air route in the world.
  • In 2015, 3.5 million UK tourists visited Ireland, while 2.6 million Irish tourists visited the UK.

 
Clearly, the British-Irish trade relationship is a very important aspect of both islands’ economies. Indeed, total external trade with the UK amounts to 35% of Irish GDP.  The Economic and Social Research Institute has estimated that trade flows between Ireland and the UK could be reduced on average by 20% if a “Brexit” was to occur.

 

What Happens if the UK Votes to Leave the EU?

For UK Prime Minister, David Cameron, the summit of EU leaders held on 18th and 19th February 2016 delivered a “New settlement for the UK within the EU”.  However, if on 23rd June the UK electorate votes to leave the EU, Prime Minister Cameron will then contact Donald Tusk, President of the European Council, copying all the other European leaders, to officially inform him of the decision of the UK and thereby trigger Article 50 to formally commence withdrawal from the EU.  A period of negotiations between the UK and the remaining EU members will follow. 

There is a misconception that a special bilateral British-Irish trade agreement mirroring our contemporary arrangement could be swiftly negotiated in the event of a Brexit.  In fact, EU trade policy is made exclusively at EU level, negotiated by the European Commission.  This means that EU national governments cannot negotiate a bilateral trade agreement with a non-EU member.

While we don’t know what a post-Brexit trade deal would be between the UK and EU, it is likely that negotiations would be lengthy.  In the meantime, should the UK have to fall back on World Trade Organisation rules, the EU’s common external tariffs on non-EU countries that it doesn’t have preferential trade deals with would apply.  The UK would also lose its preferential access to the 53 countries which have trade deals with the EU.

 

Common Travel Area

Another impact of the UK voting to leave the EU, which could undermine our trading relationship, would be the dismantling of the Common Travel Area and the currently unrestricted freedom of Irish citizens to work, live, study and travel in the UK.  A Brexit may result in the establishment of border controls along the Northern Irish border, as it would be classified as an EU external border with the Republic.  How would this affect the free movement of the 30,000 or so people who cross the border every day to work or study?

After all, this is not an improbable proposition given that one of the fundamental reasons for the political desire in the UK for a referendum on EU membership is the perceived necessity that Britain must take back full control of its borders to reduce the number of people from the EU seeking work there. 

The implications for trade, tourism and community relations on both sides of the border would be immense.  Similarly, the hassle-free air travel we have enjoyed into the UK may be undermined by a possible Brexit, with increased border security and the possibility of increased air fares.  This would not be welcome news for the 4.5 million people who fly between Dublin and London each year, making it the second busiest air route in the world.

 

Conclusion

The question to be put to the electorate on 23rd June will be 16 short words: “Should the United Kingdom remain a member of the European Union or leave the European Union?” Of the 46 million eligible voters who will have the opportunity to decide on it, an estimated 500,000 are Irish citizens living in Britain, along with at least 5 million British people living in England, Scotland and Wales who can claim at least one Irish-born grandparent.  An additional 120,000 are eligible UK expats living in Ireland.  Of the UK’s total population, Northern Ireland’s 1.8 million people represent approximately 2.9%, Scotland’s 5.3 million people represent 8.2%, Wales has 4.8% with a population of 3 million and England is at 84% with 54 million.

Only one number will matter on 23rd June and that is the difference between those who vote to remain in the EU and those who vote to leave. If the United Kingdom votes to leave the European Union, the only certainty is that there will be unprecedented uncertainty in the relationship between the UK and Ireland. The prospect of a possible 20% reduction in trade between both countries, the potential for border patrols and the negative impact on the EU of losing one of its most influential members will all have to be reckoned with if such an outcome does arise.

 

Written by: Noelle O’Connell, Executive Director, European Movement Ireland – facilitating links between the EU and Ireland

 

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