Brexit: What it means for Irish Business
Brexit will affect Irish business both negatively and positively but the net outcome, irrespective of whatever deal is done, will not be good for the Irish economy – forecasts of an ultimately lower GDP vary from about 1% to 3%. Some consequences may have less impact as time goes on but having a major trading partner “on the outside” can never represent the best economic scenario. Irish businesses will be affected due a range of factors. A weaker sterling is likely – mostly affecting Ireland’s Agri-food, Tourism, SMEs and Retail sectors.
The UK will likely use all new flexibilities in order develop their trade with states outside the EU. Although some policy changes could ultimately be counter-productive to the UK, the potential for damage to Irish exporters is immediate. Several logistical issues will also arise. UK policy will likely be focused on driving down regulatory costs for business thus creating additional pressures on Irish exporters. Furthermore, goods transported to and from Ireland to the UK and the Continent will probably face additional physical and administrative barriers. Costs will be higher, affecting price levels in Ireland and putting additional pressures on export sectors whose margins are already very tight. In addition, cross-border tourism is likely to be negatively affected, while security issues could become a very serious cross-border issue.
Regardless of probable negative effects of Brexit, there are also opportunities for Ireland. The financial services sector will benefit as UK-based firms look to relocate to stay within the EU (although centres such as Frankfurt, Paris and Luxembourg will be tough competition). Regarding FDI, the IDA is already on the road promoting Ireland as the only English-speaking (and business-friendly) EU member state. EU research funds to the UK will likely be severely cut and Ireland should benefit, while, opportunities in the public procurement space should be created for more Irish companies to fill the gap and compete.