August 26, 2019
Brexit: An Update from IrelandContact
This update from Ireland offers an insight into Irish commentary on Brexit, the reaction to the appointment of Prime Minister Boris Johnson, as well as the likely trade and economic impacts arising from Brexit for Ireland.
The political temperature has risen with the appointment of Boris Johnson as Prime Minister. A visit to Dublin from Prime Minister Johnson is expected in the coming weeks, however leader of the opposition, Micheál Martin said, “The accession of Boris Johnson to Downing Street quite rightly raises enormous fears for the future of relations between the governments, and also London’s policy towards Northern Ireland.” Meanwhile the Government are holding a more neutral line, including comments from Minister for Foreign Affairs Simon Coveney who said that Irish ministers are prepared to work constructively with the new Prime Minister through the challenges of Brexit.
Withdrawal of the United Kingdom from the European Union Act 2019
In February, the Irish Government published the ‘Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Bill 2019’ which crosses the remit of nine Government Ministers and is made up of 15 parts to prepare Ireland for a disorderly Brexit. It includes arrangements designed to ensure no interruption to utilities, international students, tax strategies and insurance among others. The legislation passed all stages in Parliament and was signed into law by the President in March 2019.
Irish Economy and Trade
• Ireland is the UK’s 5th largest export market. It is important to note that the UK runs a large trade surplus with Ireland, therefore any economic challenges facing Ireland arising from Brexit, will likely harm UK businesses also.
• A Central Bank of Ireland official stated that the prospect of a disorderly Brexit has still not been fully priced into Currency Markets, warning that a no-deal Brexit may push economic growth down to 0.7% next year, against current forecasts that GDP would expand by 4.1%
• Ibec, which represents Irish business, have revised their economic forecasts. “In the event of a no-deal Brexit, we expect significant impacts from continued depreciation in the value of sterling, cancelled investment, falling consumer confidence, rising costs and significant trade disruption. The economy may still grow, but growth would more than halve in 2020 and employment growth could fall below 0.5%.”
• Because of the risk to the food and agri-food sector, it is projected that the Midlands and the Border counties where agriculture and food processing are prominent, are predicted to be worst hit.
• Exporters from Ireland using the land-bridge to Europe via the UK are being warned that they are likely to encounter major disruptions at ports.
• The Irish Minister for Finance Paschal Donohoe has predicted that the relationship between the UK and Ireland would “fundamentally change” in the event of a no-deal Brexit stating, “it would have a fundamental effect on the nature of the economic relationship between the UK and Ireland because they would be outside the single market, they would be outside the customs unions and they would be treated like [that] from a trading point of view.”
The Irish Border and the Backstop
• Brexit also means Northern Ireland is leaving the EU which in turn means that checks would be required along the 310-mile-long Border in Ireland as different trade rules would apply in Northern Ireland and in the Republic of Ireland, after Brexit. The Border in Ireland will become the only land border between the UK and the EU after Brexit.
• The Backstop has become centre stage in Brexit discussions in recent weeks. Prime Minister Johnson wants to “bin the Backstop” while the Irish Government insists on the Backstop to avoid a hard Border, given the UK and Ireland’s commitments under the Belfast / Good Friday Agreement.
• There are however issues with the Backstop beyond Prime Minister Johnson – The DUP (Democratic Unionist Party) are opposed to the Backstop as a different regime would apply in Northern Ireland compared to the rest of the UK. Northern Ireland would also be applying EU rules in some areas while having no input into how these are formed.
The Belfast/Good Friday Agreement – why does it matter?
• After years of political dialogues and many decades of violence, the Belfast / Good Friday Agreement was signed by the British and Irish Governments along with all the main political parties in Northern Ireland, except for the DUP in April 1998. This was subsequently voted on by the people of Ireland, North and South, on the same day in May 1998, thereby giving full democratic consent to the new political arrangements that had been agreed. The 1998 Agreement changed the constitutional status of Northern Ireland. It also changed the rules under which that constitutional status might be altered.
• In the context of debate and discussion about Brexit, it provides a complicated context for engagement between the British and Irish Governments and the European Union. Since 2016, when the UK Government commenced the process to leave the European Union, all leading UK Government representatives have stated that we must protect the Belfast / Good Friday Agreement.
• In practical political terms it means that the constitutional status of Northern Ireland can only be changed with the express will of the people of Northern Ireland in a vote. It cannot be changed by an Act of Parliament in Dublin, it cannot be changed by an Act of Parliament in London, and it cannot be changed by a decision of the European Council.
• Along with the United States, the British and Irish Governments are co-guarantors of the Good Friday Agreement, yet it remains to be seen if the changing political landscape in Whitehall will fully grasp the responsibility that comes from acting as a co-guarantor to this agreement. A change in leadership or indeed a change in Government in Dublin will not to alter the approach to supporting the Irish backstop and protecting the Belfast / Good Friday Agreement.
• It should be noted that some ‘Leave’ campaigners proclaimed that the United Kingdom would be able to sign a free trade agreement with the United States quickly and with ease. In the context of the U.S. commitment as a guarantor of the Belfast / Good Friday Agreement, it is important to note a speech from April 2019 by Nancy Pelosi, Speaker of the US House of Representatives, when she addressed the Irish Parliament. On the issue of Brexit, she stated:
“Let me be clear if the Brexit deal undermines the Good Friday Accord (Agreement), there will be no chance of a US-UK trade agreement”…“We must ensure that nothing happens in the Brexit discussions that imperils the Good Friday Accord, including but not limited to, the seamless border between the Irish Republic and Northern Ireland.”
For more information, please contact Lucy C. Cronin, Senior Managing Partner, Public Policy