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Brexit - how will it affect the Irish Economy?


Brexit and how it might affect you….

At a time when we reflect on the challenge to secure the right to control our future 100 years ago, in June 2016, the UK will wrestle with their need to have more control over their own affairs by considering leaving the European Union, the move known as “Brexit”...... but what effect would this Brexit have on the Irish economy?

In the short term, probably very little will be evident. Trade agreements currently in place within the EU allow for a two year period on a member leaving, so there would be continuity whilst trade agreements are presumably re-negotiated. So the immediate impact of a BREXIT would hopefully be minimal.

The Irish economy relies heavily on its export business and from a position where we were previously heavily dependent on the UK for trade, our exports to the UK now only represents 15% of the overall export business, so the Irish economy should cope with any changes that may occur though some sectors, such as our agri-export industry would clearly suffer more significantly.

There are some emotional issues that grab the headlines such as border controls but these will probably be “non-events” in our opinion. More importantly will be the impact of North / South cross-border trade and how this will affect the Irish economy. The Northern Assembly were looking to set their own, lower corporation tax rate, as we have done, to attract trade and this may have spun off into the South and boosted the economy here.

A Brexit may change this, so an adverse effect may be seen. There is also the danger of the UK applying an import levy being on all imported goods (our exports) but, as mentioned earlier, this is not likely in the short term.

Freedom of movement is also an issue as we have always enjoyed free passage to and from the UK to live and work. Should restrictions be placed on immigration, will Irish workers be forced back to the Republic? If so, will this put pressure on the Irish economy to provide jobs? Would Social Welfare payment costs escalate causing the Irish economy to struggle to balance the books once again?

Many unanswered questions remain should a Brexit occur and how the Irish economy copes, remains to be seen. Like most issues the reality will probably be less noticeable, on a day to day basis, than the press speculation would have you believe. We will still trade, travel and of course, millions will continue to live and work in the UK should a Brexit occur.

The Irish economy will see some changes, but not for at least 2 years, so it will be well into 2018 before we see the full impact – if and when the UK vote to leave the EU. So for now, let’s just watch the entertaining “yes” and “no” arguments develop.

To see a more, in-depth analysis of the possible impact upon the Irish Economy click on this link..

Steadfast Financial
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