Insurance · 5 November 2015

Brexit could have “serious” impact on Ireland, cutting Irish-UK trade by 20 per cent

The ESRI report warned a Brexit could have serious economic consequences for Ireland
The ESRI report warned a Brexit could have serious economic consequences for Ireland

A British exit from the European Union would have “very serious consequences” for the island of Ireland – particularly Northern Ireland – as bilateral trade flows could fall by at least 20 per cent over the long-term.

A new report from economic think-tank the ESRI considered the economic consequences for Ireland if Britain went on to exit the EU, concluding Ireland’s interests would be best served if the UK was to remain a member of the EU.

The 20 per cent trade loss figure was the average, with the ESRI saying this could well be higher and would vary depending on the sector. The report pointed out merchandise trade in particular is heavily concentrated in some sectors and products and indigenous firms are more dependent on the UK as an export market.

For merchandise trade in particular, trade is very concentrated in a few product types, so increased trade barriers could have a serious impact on trade volumes.

One of the authors of the report, Edgar Morgenroth, said the potential drop in Irish exports to the UK could cost up to £3bn euros or £2.1bn every year.

“Given that there seems to be a bigger reliance on the Irish market for Northern Ireland businesses, any trade impediment would obviously hurt Northern Ireland more,” he said.

Referring to data form the Northern Ireland Statistics and Research Agency, the ESRI report said the Republic of Ireland accounted for up to 38 per cent of services exports from Northern Ireland, making it a “very important destination”.

The all-Ireland electricity market could also take a hit, as this cross-border interconnection was, the report said, “particularly important for Northern Ireland which relies on electricity imports from Ireland to make up for insufficient local electricity generation capacity”.

A Brexit could mean the interconnection would leave Ireland “vulnerable” to any problems in the British electricity market.

The ESRI also warned Britain leaving the EU could result in passport controls imposed on the border and the removal of the automatic right to work in Britain.

Residency problems could then crop up for the 400,000 Irish-born people living in the UK. The imposition of passport controls at the border with Northern Ireland would “be at best inconvenient and at worst a worryingly regressive step in terms of facilitating cooperation between both parts of the island”, according to the report.

The UK is to hold a referendum on the future of its EU membership before the end of 2017.

Sign up to our newsletter to get the latest from Business Advice.



Rebecca is a reporter for Business Advice. Prior to this, she worked with a range of tech, advertising, media and digital clients at Propeller PR and did freelance work for The Telegraph.

Supply chain